Cost Segregation
Cost Segregation is a highly beneficial, IRS-preferred tax planning strategy utilized by commercial real estate owners to accelerate depreciation deductions, defer tax, and improve cash flow. Cost Segregation is a unique tax strategy because the IRS has stated that a study performed by an Engineering Professional rather than a CPA is preferred due to its technical complexity.
A Cost Segregation Study is based on a detailed engineering-based analysis that is used to support the acceleration of depreciation deductions by identifying costs that can be allocated to shorter recovery periods; primarily 5, 7, and 15-year, as opposed to 27.5 (residential rental) or 39-year (commercial). In properly allocating assets to their appropriate shorter recovery periods, Federal Income Tax Liability can be significantly reduced and cash flow improved markedly. The law also allows taxpayers to recover taxes for deductions not taken in previous years.
Any commercial property that has been acquired, constructed, or improved since 2000 is an excellent candidate for a study. Optimum Tax Strategies provides a free preliminary analysis for any property that fits this criteria. This allows the taxpayer to know the amount of additional deductions that will be achieved with a study, and weigh the cost/benefit of taking advantage of a Cost Segregation study. Listed below are the types of properties that are excellent candidates for a study:
- Automobile Dealerships
- Apartment Complexes
- Assisted Living Facilities
- Warehouses
- Hotels
- Manufacturing/ Industrial
- Medical/Hospital Facilities
- Office Buildings
- Retail Shopping Centers
- Restaurants
Please contact us for a free preliminary benefit analysis.