§1245 – Page 5 – Segregation Holding

How cost segregation works for the commercial property owner…

By Jeff Hobbs March 9, 2012

1) Modified Accelerated Cost Recovery System (MACRS) is the IRS-required method of depreciation for tangible personal property (§1245)* assets residing within real property (§1250) assets, and cost segregation is required in order to apply it properly which places the owner in IRC tax compliance. 2) §1245 assets are depreciated over 5-, 7- and 15-years while…

April 15th is around the corner…are you about to write a big check to the IRS?

By Jeff Hobbs March 2, 2012

Are you ready to write a big check to the IRS on April 15th? It’s just around the corner you know! But wait…you don’t have to send the IRS any money if you use your building as the tool the IRS allows for and in the manner prescribed by the Internal Revenue Code…depending, of course,…

Should architects include cost segregation in their design considerations?

By Jeff Hobbs February 20, 2012

Cost segregation simply classifies commercial property assets into each appropriate life-class (5-, 7-, 15-, or 39-years). If an architect takes into consideration “how” a building is designed with federal income tax consequences in mind, at least two things would occur. The first is the project in question would become more cost effective to the owner/client.…

Can a cost segregation study apply to buildings not yet constructed?

By Jeff Hobbs January 24, 2012

Can a cost segregation study apply to buildings or leasehold improvements not yet constructed? Yes! A cost segregation study can literally begin at the concept phase long before plans are drawn. The study could be completed, 1) once the Certificate of Occupancy is issued and, 2) the final tax-basis is ascertained from the final AIA…

What is the difference in Section 1245 property and Section 1250 property?

By Jeff Hobbs May 10, 2011

The benefits of the ITC were somewhat offset by the provisions of IRC §§ 1245 and 1250, also enacted in 1962. These Code sections result in the conversion of capital gain to ordinary income on the disposition of a property, to the extent its basis has been reduced by an accelerated depreciation method. The definitions…