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What Is Cost Segregation?

Cost Segregation is a process to identify personal property assets that often get buried or lumped together within the real property asset.  Our consultants reclassify those asset costs to the shortest possible depreciable life to enable the real estate owner to maximize their tax depreciation deduction, thereby reducing current income tax obligations. If you are undertaking construction, renovation or purchase of a building, you may be eligible for substantial state and federal tax savings.

Certain assets related to the project may qualify for accelerated depreciation, meaning you can take larger tax deductions over a shorter period. The benefits of larger tax deductions include increased cash flow and lower cost of capital in the first few years following a project or purchase. A cost segregation study, conducted by the qualified professionals at Cost Segregation Partners can help you identify opportunities to claim accelerated depreciation. Substantial tax savings for your business may lie in the floor beneath your feet, within the walls around you or even in the shrubs outside your building.  But only a cost segregation study, performed by a qualified CPA, can tell you for sure.

 
What Is It For?

A cost segregation study is a strategic analysis that allows companies that have constructed, bought, expanded or remodeled real estate to increase their cash flows by accelerating depreciation-related tax deductions.  To do so, the study identified, segregates and reclassifies property costs currently being depreciated over the typical 39-year depreciable period to shorter depreciable periods of 15, 10 seven or even five years. This means you can enjoy tax deductions right now that you’d otherwise have to wait years to receive.  So you’ll not only increase the net value of current tax savings, but also boost your cash flow.  

A cost segregation study may be a particularly wise move if you’re:
  • Building a new facility
  • Acquiring an existing building,
  • Improving, renovating or expanding an existing building, or
  • Conducting leasehold improvements on your current facility. 
The analysis works most efficiently for new buildings under construction, but it can uncover retroactive deductions for older buildings as well.