Description
Learn about how a cost segregation study helps US commercial property owners accelerate depreciation deductions to increase cash flow.
For commercial property owners in the USA, managing tax liability is crucial for maximizing cash flow. One powerful yet often overlooked strategy is cost segregation. This IRS-approved method allows taxpayers to accelerate depreciation deductions on commercial real estate, moving building components from a standard 39-year or 27.5-year recovery period down to 5, 7, or 15 years.
So, how do you do cost segregation? Behind the simple structure of most buildings lies a complex network of electrical wiring, installations, and equipment. There's flooring and lighting, as well as paving for the parking lot and landscaping and drainage improvements around the outside. Personal property assets and land improvements can be disaggregated from the structure through a rigorous engineering analysis.
Accelerating depreciation benefits property owners by allowing them to accelerate depreciation deductions, providing an immediate cash flow boost. Even though total depreciation deductions are not increased by using cost segregation, the time value of money means that the same deductions taken at the beginning of a property's life are worth more than taking those same deductions over a longer period of time. Cost segregation is a tangible way to maximize the ROI of your property.
