Finding new ways to reduce tax liabilities and enhance cash flow is a top priority for every corporate manager and executive. Unfortunately, opportunities to have a large impact are very often few and far between. However, if your company has recently purchased, developed or improved leased commercial property, you may be able to “discover” new tax saving opportunities through a cost segregation study. While the rules and regulations governing these studies are quite complex, the professionals at JLK Rosenberger are here to guide you
What is a Cost Segregation Study?
A cost segregation study identifies the assets and costs of your commercial real estate or construction project and classifies them for federal tax purposes. Traditionally, most will classify assets (electrical, mechanical and plumbing features) on a 39 year depreciable life schedule providing a consistent tax benefit. However, through a cost segregation study, these same assets are re-classified with a 5, 7 or 15 year depreciable life schedule using accelerated methods. This allows a company to depreciate assets in a new or existing structure in the shortest amount of time under current tax laws. The result is less time to realized tax savings.
Who is Eligible?
Only certain entities are eligible to conduct cost segregation studies including pass through entities such as S-Corps, LLCs. Partnerships, C-Corps and Real Estate Investment Trusts. In addition, only companies engaged in the construction or commercial real estate, have recently purchased new property, interested in assessing existing commercial property, undergoing renovations or expansions or recently completed leasehold improvements are eligible.
Take the Next Step
Cost segregation studies can be complex, but the end result is simple: tax savings. For additional information on our firm, service approach and cost segregation experience, click here to contact us or feel free to reach out to the highlighted professionals. We look forward to hearing from you!