Cost Segregation Studies
A cost segregation study is a process of identifying personal
property assets that would typically be depreciated over 39 years
as part of a building and reclassifying these assets into class
lives of five, seven or 15 years. Having a cost segregation
study allows for accelerated depreciation expense and a reduction
of taxable income.
Recent IRS procedures allow owners of commercial real estate to
go back in time to "catch up" depreciation deductions that were
warranted, but not taken, in previously filed tax returns. The
procedure offers you the opportunity to file using this catch up
amount without amending previous years' returns. The immediate
correction or catch up can go back as far as 1987 and is applied to
a single (current) tax year as an acceleration of depreciation
expense. This means you can enjoy tax deductions right now
that you'd otherwise have to wait years to receive.
A cost segregation study is recommended if you are:
- Building a new facility
- Acquiring an existing building
- Improving, renovating or expanding an existing building
- Conducting leasehold improvements on your current facility
Cost segregation studies are beneficial especially for:
- Apartment complexes
- Automobile dealerships
- Distribution centers
- Fast food restaurants
- Food processing facilities
- Hotels/motels
- Manufacturing plants
- Medical centers
- Nursing homes
- Office buildings
- Retail chains
- Shopping malls
- Sports stadiums
- Supermarkets