Things You Should Know About Cost Segregation 

Cost Segregation is a helpful method that will:

  • INCREASE a business owner’s cash flows and,

  • DECREASE their taxable income. 

 

HERE’S HOW:   This can be achieved by re-classifying improvements to your commercial building as personal property rather than real property.  

 

We will help you navigate the process of reclassifying these improvements while providing our expert advice to maximize your tax benefit. 

 

If this applies to you, then read on. 

 

How will a Cost Segregation study create cash-flow for your business?

This process allows the assets to be depreciated on a 5, 7, or 15-year schedule instead of the traditional 39-year life of real property. Thus, your current taxable income will be greatly reduced and your cash flow will increase $60,000 to $100,000 for every $1,000,000 of building cost. 

 

How will the new Tangible Property Regulations affect my business?

The new repair and maintenance regulations are the biggest tax change since 1986. Compliance with the new regulations is not optional, and Cost Segregation is called “the certain method” to getting the calculations right. 

 

First, your existing depreciation schedule must be scrubbed and any items that do not rise to the new level of capitalization MUST be expensed. Regulation 1016–3 says that if this is not done prior to an audit the remaining depreciable basis of the items can be disallowed. Second, moving forward there are new capitalization criteria and three safe harbors that can be utilized to expense expenditures that would normally be capitalized. 

 

Contact us today to get a free evaluation  and to discuss your qualification and potential  estimate on the credits.