Cost Segregation is a lucrative tax strategy approved by the IRS in the late 60’s to reclassify specific real property assets that usually receive a depreciation life of 39 years (commercial real property) or 27.5 (commercial residential) into “tangible personal property” that is treated as five (5) year property or land improvements which are treated as fifteen (15) year property for depreciation purposes. Due to improved treatment, portions of the electrical, plumbing, mechanical systems, and site improvements of a building along with hundreds of other components can be allocated into shorter lives translating into immediate cash flow.
This effectively increases tax payer’s depreciation expense in today’s dollars. By recouping up to 25% – 40% of the building cost over the first 5 years as opposed to depreciating it over 39 years, translates into significant tax savings and taps into the concept of the “time value of money”.
On average, a Cost Segregation Study offers approx. $150,000 in additional depreciation per $1 million dollars in purchase or construction cost over the normal 39-year straight-line method.
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|RESTAURANTS||20% TO 45%|
|HOTELS||30% TO 50%|
|SHOPPING MALLS||22% TO 40%|
|MEDICAL/DENTAL||22% TO 35%|
|INDUSTRIAL||22% TO 40%|
|AIRPLANE HANGARS||18% TO 35%|
|GOLF COURSES||28% TO 40%|
|RETAIL FACILITIES||18% TO 35%|
|THEME PARKS||16% TO 22%|
|OFFICE BUILDINGS||20% TO 35%|
|GROCERY STORES||20% TO 45%|
|APARTMENT BUILDINGS||20% TO 45%|
|FITNESS CENTERS||22% TO 45%|
|BANKS||30% TO 47%|
|MANUFACTURING||30% TO 45%|
|AUTO DEALERSHIPS||22% TO 40%|
|LEASEHOLDS||18% TO 40%|
|RESEARCH FACILITIES||22% TO 45%|
|ASSISTED LIVING/RETIREMENT||22% TO 45%|
|RESORTS||25% TO 45%|
|WINERIES||18% TO 25%|
|MIXED USE PROPERTIES||18% TO 30%|