The IRS allows commercial/industrial property owners and investors to accelerate depreciation on the assets that are identified as personal property through a process known as Cost Segregation. Accelerated depreciation reduces current taxable income and allows the taxpayer increased cash flow.

With the current economy as it is and companies not showing any taxable income, what is the benefit of accelerating the depreciation expense? With the new net operating loss (NOL) rules, a company may be able to use the accelerated depreciation to recover taxes they paid in the past (yes, get tax refunds), or, if they are anticipating paying taxes in the near term, this may be a way of reducing them.

Cost segregation is for any type of commercial/industrial property placed in service after December 31, 1987. Cost Segregation makes sense for properties with $1M of depreciable cost basis and/or $300,000 or more Tenant Improvements.

Thus, Cost Segregation is a source of capital for a business (via tax refunds) to reduce expenses and/or debt. Also, it reduces estimated tax payments (in lieu of tax refunds).

For a free initial consultaion, please contact us.

Our engineering alliance leads the industry in conducting engineering based cost segregation studies on commercial real estate. ..... Our engineering alliance leads the industry in conducting engineering based cost segregation studies on commercial real estate.
Please e-mail your questions to Rick Chehab, Broker or Call 408/981-1565

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