Thinking of taking cost segregation
services? Here’s all you need to know about the services.
What is a Cost Segregation Analysis?
A cost segregation is a strategic process where a cost
segregation specialist analyzes commercial real estate to determine whether
identifying and segregating certain components of the property as personal
property that are separate and distinct from the real property will produce any
accelerated depreciation benefits for income tax purposes.
The cost segregation analysis categorizes
assets in the following:
- personal property which includes furniture and fixtures, carpeting, and window treatments.
- land improvements like sidewalks, paving, or landscaping,
- buildings or structures
- land
What to expect from cost segregation
services?
A cost segregation specialist identifies the
components of the property that can be considered to be personal property and
will reclassify those assets into the applicable shorter depreciation periods
in order to generate additional depreciation deductions for income tax
purposes. Any commercial real estate acquired or built into service after 1986
which includes any new acquisition, real estate construction, building, or
improvements, will qualify for cost segregation.
When should a Cost Segregation study be
conducted?
A Cost Segregation study can be done any time after
the purchase, remodel or construction of a property. The ideal time for getting
this service done is during the year a building is constructed, purchased or
remodeled. For investors who are in the planning phases of construction or
remodeling, the best time to consider a Cost Segregation study is before the
infrastructure of the building is set.
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