
Invaluable Tax Saving Tool
Increase Cash Flow. Accelerate Depreciation Deductions. Defer Federal and State Income Taxes.
Cost segregation is an invaluable tax savings tool. It allows companies and/or individuals who have constructed, purchased, expanded, or remodeled real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes. Cost segregation studies achieve this through identifying, segregating, and reclassifying personal property assets and land improvement assets which are depreciated over shorter tax lives as compared to the traditional 27.5-year (residential rental property) or 39-year (nonresidential real property) lives.
The ideal time to begin a cost segregation study is when a property is first placed in service. However, a cost segregation study can be performed on any property already in service. IRS procedures allows a change in accounting method to take advantage of misclassified assets without amending prior tax returns. This procedure allows the recapture of the understated depreciation expense for any asset that has been reclassified in previous tax years. Cost segregation can also be used in the event of a like-kind exchange or a step-up in basis that has been recorded.
Other Cost Segregation Services
- Look Back Studies
- Repair Studies
- Section 179 Studies
Potential Reallocation of Costs to Shorter-Lived Property
TYPE OF PROPERTY | LOW RANGE | HIGH RANGE |
Apartments | 10% | 35% |
Car/Truck Dealerships | 20% | 40% |
Supermarkets | 15% | 40% |
Hotels/Resorts | 15% | 50% |
Assisted Living/Nursing Homes | 15% | 30% |
Medical Offices | 20% | 40% |
Restaurants | 15% | 30% |
Retail/Shopping Centers | 15% | 40% |
Light to Heavy Manufacturing | 20% | 60% |
Tenant Improvements | 10% | 50% |
Warehouse/Distribution | 5% | 30% |
Gas Stations/Convenience Stores | 25% | 50% |
Case Studies
Here are some actual results from cost segregation studies we have completed.
$2.5M
Bonus Depreciation
$6.2M
Bonus Depreciation
$850K
Additional Depreciation