“Cost Segregation” studies provide building owners with well-accepted procedures allowed by the Internal Revenue Service to accelerate the writing off the cost (depreciation) of new construction or renovations to existing buildings. By analyzing the various types of renovation costs, some of these costs can be depreciated over 5, 7 or 15 years instead of the 39 years generally calculated for “real property” costs.
Cost Segregation allows for receiving larger depreciation deductions for the building owner in the early years, accelerating tax saving cash-flows for the owner. There is no increase in the owner’s total amount of depreciation (limited to the total purchase, construction or renovation costs minus the cost of any raw land) but a faster Return on Investment (ROI). Having more current depreciation translates into earlier tax savings for the building’s owner.
Even commercial and residential rental building owners can take advantage of the increased cash flow that a Cost Segregation study can provide.
“As I was constructing my new office/warehouse building in 2010, Steven suggested & performed a Cost Segregation Study, accelerating over $525,000 in depreciation costs over 5, 7 & 15 years rather than over 39 years. The shorter term tax cash-flow benefits provided by the Cost Segregation Study allowed me to use the income tax savings for current working capital and investment needs. Steven also helped me accelerate over $100,000 of additional build-out depreciation costs in 2013. I recommend a Cost Segregation Study as being critical for any building owner looking for the tax cash-flow benefits of accelerating the write-off of new construction”.