Cost Segregation
ON AVERAGE, 20% OF THE PURCHASE PRICE OF AN INVESTMENT PROPERTY IS AN IMMEDIATE DEDUCTION.
That’s $200K on a $1M property and $2M on a $10M property.
Accelerated Depreciation - Key Questions
✅ Do you pay taxes?
✅ Do you own a property used in business?
✅ Planned or performed any renovations?
Set up a 15 minute call to see if cost segregation could would for your investment or commercial property.
COST SEGREGATION OVERVIEW
Cost segregation is a tax planning strategy used by real estate owners to accelerate their depreciation deductions and reduce their tax liabilities. It involves identifying and reclassifying certain building components and assets as personal property or land improvements, which have shorter depreciable lives than the building itself.
The idea behind cost segregation is that by separating out these shorter-lived assets, the owner can depreciate them more quickly, which results in higher tax deductions in the earlier years of the property's life. This can provide significant tax savings and increase cash flow.
The cost segregation process involves a detailed analysis of a property's construction and asset components, typically conducted by a qualified cost segregation specialist. The specialist will identify and assign costs to various property components, such as electrical and plumbing systems, flooring, lighting, and landscaping, to determine their respective useful lives for depreciation purposes.
Cost segregation is particularly valuable in the current tax landscape, with changes to STR laws and the past five years of bonus depreciation at 100%.
This tax planning strategy can result in significant tax savings for commercial properties, such as office buildings, warehouses, and hotels. Additionally, residential rental properties may benefit from cost segregation if they meet certain criteria.
The current value of cost segregation is at a premium, making it an increasingly popular tax strategy among real estate investors.