As a property owner of commercial real estate, are you aware of the depreciation benefits that are at your disposal? Did you know that many of your business assets as well as land improvements may qualify for accelerated depreciation? Instead of the standard 39 years, certain assets will be eligible to be depreciated over the course of 5, 7 or 15 years using accelerated depreciation. The truth of the matter is that it is very rare that property owners are reaping all the depreciation benefits and this is where a cost segregation study will come into play. What a cost segregation study does is helps to accelerate depreciation of qualifying assets that will help to lower the income tax burden, increase cash flow as well as enhance the property’s overall financial return.
So, who qualifies for a cost segregation study? In terms of real estate owners, the following situations would be eligible for a cost segregation study:
- Any new buildings or buildings that are currently being constructed
- Newly purchased existing buildings
- Existing buildings that may be undergoing renovations, improvements or expansions
- Any tenant leasehold improvements that have been made
During the cost segregation study process, our team of professional engineers will define all assets that will qualify for accelerated deprecation based on the IRS guidelines. These include tangible personal property such as, but not limited to, carpeting, millwork, cabinetry, dedicated plumbing or electrical. In most cases these assets can qualify for a 5 year accelerated depreciation. Land improvements such as landscaping, parking, sidewalks, or curbs will be eligible for an accelerated deprecation of 15 years instead of the standard 39 years. A cost segregation study helps property owners to realize the significant income tax benefit that can be obtained by correctly identifying all qualifying assets. This helps to lower the income tax burden which of course leads to an increase of cash flow and that is something that every business could benefit from, right?
The tax benefit that will result from having a cost segregation study done by Segregation Holding will vary from business to business but generally speaking our results often far exceed that of our customer’s expectations. So, if you are a real estate property owner and would like to finally find a way to keep more of your hard earned money, the time to do a cost segregation study is now.
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