The impact of Cost Segregation Studies can be significant. A process by which commercial property owners can accelerate depreciation and reduce the amount of taxes owed, Cost Segregation Studies help investors recover the cost of owning, operating and maintaining their property. By using this process, the amount of money you owe on your income taxes each year is reduced. This also reduces the expenses of owning investment real estate and increases current cash flow.
A Cost Segregation Study would ideally be ordered during the same year after you purchase, build or remodel a property. This optimizes the most tax savings during the year that you are also spending the most money on your purchase. If you did not have a Cost Segregation Study performed when you first built, purchased or remodeled a property, you can order a look-back study. This type of Cost Segregation study provides you an opportunity to claim a catch-up tax deduction in a single year. The IRS allows you to perform a look-back study on properties that you bought, built or remodeled as far back as January 1, 1987.
A significant savings is possible by obtaining a Cost Segregation Study. This Internal Revenue Service approved program, based on the Investment Tax Credit, could save the tax payer more than 20% on the depreciation of the qualifying assets of their commercial property. The goal of a Cost Segregation Study, is to separate the personal property assets from the real property assets and identify and properly classify the components of a commercial property so that the depreciation of certain qualifying assets can be accelerated to 5, 7 or 15 years instead of the current rate of 39 years.
Contact us now for more detailed information on a Cost Segregation Study for your investment properties.