At Innovative Property Tax Solutions, we feel that every commercial property owner should be made aware of the financial benefits of a cost segregation study.
Cost Segregation is an IRS-approved application of re-classifying components of real property improvements to personal property. This process allows the assets to be depreciated on a 5, 6, or 15-year schedule instead of the traditional 27.5 or 39-year depreciation schedule of real property. This gives property owners the ability to accelerate depreciation and reduce the amount of taxes owed, increasing cash flow.
If you have at least a $200,000 commercial, industrial, investment residential, or leasehold improvement property purchased after 1986, regardless of how old, you may qualify for a cost segregation study. The American Society of CPA’s and the IRS both recognize cost segregation as an important tax savings benefit. You don’t even have to refile a return to get these benefits. You only need to change your accounting method from the incorrect way to a correct one. The overall savings can generate substantial cash flow by accelerating depreciation tables. That’s money that can be reinvested in the business, used for acquisitions, applied to principle payments or even spent internally on the employees.