Cost Segregation is an engineering-based process of identifying and valuing the component parts of commercial real estate for the purpose of determining which parts can qualify for shorter depreciable lives.
Shorter depreciable lives result in accelerated depreciation deductions, which can result in tax savings (through tax deferrals) and increased cash flow for the property owner.
Real property eligible for cost segregation includes buildings that have been purchased, constructed, expanded or remodeled since 1987. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $500,000. A cost segregation study is most efficient for new buildings under construction, but it can also uncover retroactive tax deductions for older buildings.
Building types studied include:
Apartment complexes
Automobile dealerships
Distribution centers
Fast food restaurants
Food processing facilities
Hotels/motels
Manufacturing plants
Medical centers
Nursing homes
Office buildings
Retail chains/franchises
Shopping malls
Sports stadiums
Amusement parks
Supermarkets
Casinos
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