27W430 Warrenville Road
Warrenville, IL 60555
3847 N. Lincoln, Suite 200
Chicago, IL 60613
Cost Segregation Study
A tax segregation study can provide real estate owners with with tremendous tax benefits and savings from accelerated depreciation.
What is a Cost Segregation Study?
Cost Segregation is the process of identifying personal property assets that are grouped with real property assets, and separating out personal assets for tax reporting purposes. Most accountants depreciate all commercial buildings and improvements whether constructed or purchased over 39 years.
An engineering based cost segregation study is conducted to identify and reclassify personal property assets to shorten the depreciation time of specific assets for taxation purposes. Depreciable commercial real estate actually consists of four distinct kinds of property. Three of these kinds of property qualify for much faster depreciation. The result of this process is to reduce current income tax obligations.
Cost segregation studies can provide increased cash flow to a project owner by accelerating depreciation deductions. Cost segregation is a tax strategy that has been around for a long time, but not commonly used or well understood. A cost segregation study involves reviewing the costs incurred to acquire, construct,or improve real property. The result of the analysis is a classification of the purchase, construction, or improvement costs into specific types of assets associated.
Cost Segregation Resources:
IRS Cost Segregation Audit Techniques