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Commercial Property Solutions LLC
Unfortunately, the answer is most likely… yes
Commercial real estate owners who have not yet capitalized on the practice of “cost segregation” may not be maximizing allowable depreciation deductions. In fact, over 97% of the preliminary reviews we perform indicate a “cost segregation study” would result in substantially reducing their income taxes.
These “engineering-based” studies allow commercial real estate owners to identify assets that would otherwise be classified as real property (Code Sec. 1250) for depreciation purposes and reclassify them as more rapidly depreciating personal property (Code Sec. 1245). Accelerating depreciation of those assets reclassified as personal property can drive significant savings right to your bottom line.
Cost Segregation
Using cost segregation technology, you can not only defer federal and state income taxes, but reduce your overall tax burden and free up capital by significantly ramping up cash flow.
Real estate property taxes are reduced as personal assets are not subject to real estate property taxes. Insurance costs are reduced as components are identified that don’t need to be insured.
Each $100,000 in assets…
Each $100,000 in assets reclassified from a 39-year recovery period to a 5-yr recovery period results in approximately $22,000 in net-present-value-savings, assuming an 8% discount rate and a 40% marginal tax rate.
Each $1,000,000 in assets...
Each $1,000,000 in assets reclassified from a 39-year recovery period to a 5-year recovery period results in approximately $170,000 in net-present-value savings assuming a 5% discount rate and a 38% marginal tax rate.
This is a very conservative example.