Cost Segregation is a strategic, IRS-compliant approach to reduce tax payments by appropriately accelerating depreciation, allowing owners to maximize depreciation deductions on their commercial, industrial and manufacturing property. Most non-residential commercial buildings must be depreciated over 39 years for federal tax purposes, while Land Improvements and Personal Property (process related building components) may be depreciated over much shorter periods (15 years and 5 or 7 years, respectively).
Accelerating Federal Tax Depreciation
A proper Cost Segregation Analysis can re-classify prior year assets without amending tax returns as well as recover "Bonus Depreciation" for assets placed in service during bonus eligible years.
A Cost Segregation Analysis identifies and categorizes a building’s components to substantially increase cash flow by expanding depreciation deductions, lowering reportable income and income taxes. Tax benefits are incurred in the first year after the study, and tax/cash benefits over the life of the property ownership can total in the hundreds of thousands of dollars.
An additional benefit of Cost Segregation is the identification of Green Energy Tax Incentives such as Section 179D Tax Deductions and other various Credits and Rebates for investment in Energy-Efficient Buildings and Equipment.