Cost Segregation
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Cost segregation is a powerful strategy that allows commercial property owners to accelerate the investment in their facilities, reduces income tax, and helps improves their cash flow. For businesses that own or lease a facility, real estate depreciation is a significant and often overlooked opportunity to reduce income tax liability.

Conducting a cost segregation engineering study reclassifies certain items into shorter class lives. In a cost segregation study, certain costs previously classified as subject to 39-year depreciable life, can instead be classified as personal property or land improvements, with a 5, 7, or 15-year rate of depreciation using accelerated methods. 

A cost segregation analysis typically results in accelerated depreciation benefits, improved cash flow and reduction of tax liability. It identifies costs to be expenses which are documented in a detailed report outlining the reallocated fixed assets. Typically, a good candidate for a cost segregation study is any building that has been constructed, acquired or renovated in the last 15 years, by a tax-paying company that does not show an operating loss or that will be profitable in the near future.

The benefits of cost segregation are easy to demonstrate. For each dollar that is reclassified from a 39-year class life to a 7-year class life, the taxpayer realizes from $0.15 to more than $0.20 in the cumulative present value of taxes deferred. Similarly, for each dollar that is reclassified into a 5-year class life, the taxpayer realizes from $.19 to more than $0.23

The team at Research Tax Credits, LLC has garnered years of experience conducting these studies.  We understand the nuances and intricacies the IRS regulations require.

For additional information about the benefits of having a cost segregation study click here