Could money be hidden in the walls of your property?

Have you recently purchased a new building? Are you planning to construct a new facility? Are renovations of your existing building in your plans?

If you answered “yes” to any of these questions, you may want to consider a cost segregation study – an innovative method that could potentially bring thousands of dollars in tax savings over sever years.

An engineering-based cost segregation study is a powerful and strategic tool that allows business and individual property owners to increase their cash flow through depreciation benefits while minimizing their tax liability. It identifies parts of real estate property that qualify for accelerated depreciation – for example, carpeting, fencing and specialty electrical systems. The shorter the depreciation period, the greater the tax savings.

A cost segregation study is an in-depth analysis of the costs incurred to build, acquire or renovate a real estate holding. Typically, these costs are capitalized and depreciated over 39 years for commercial real estate and 27.5 years for residential real estate.

But many construction-related costs are eligible for accelerated depreciation. These include personal property items with a 5- to 7-year depreciation life and land improvements with a 15 year depreciation life.

Items that qualify for accelerated depreciation include office furniture, carpeting and millwork, as well as some not-so-obvious construction costs like architectural fees, security systems, ventilation and exhaust systems, decorative lighting and fences.

Reducing tax lives from 39 years (using straight-line depreciation) to 5,7, or 15 years (using accelerated methods) allows an organization to significantly decrease its tax liability and increase its cash flow.

At our firm, we realize how important it is for our clients to take advantage of every tax opportunity. Contact us for a free feasibility study to determine the possible tax savings a cost segregation study would bring you.