Is money hidden in the walls of your property?
A Cost Segregation Study is an indepth 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 may be 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 and can certainly save you money. For more information to determine the possible tax savings a cost segregation study would afford you, contact:
Dave Hurst, CPA
Mike Brinker, CPA