Recent IRS rulings allow commercial property owners to use shorter lives and accelerated methods for computing depreciation for tax purposes. This new application includes all categories of buildings purchased or built since 1986: including new, existing, & renovations. The increased depreciation is used as a deduction against ordinary income taxed at higher rates.
The potential for an immediate increase in cash flow from reduced taxes can be significant. One of the reasons for the immediate cash flow is that 100% of the increase in depreciation starting from date of purchase through the current tax period can be deducted on your current year tax return.

It is not necessary to file amended returns. If the increase in depreciation creates a loss for tax purposes, the loss can be carried back 2 years and forward 5 just like any other tax loss. You can use your own CPA or tax attorney to complete the appropriate tax forms using the depreciation provided from our study.

 

Here are some sample results of our cost segregation studies:

 

• Multi-family Apartments....First year savings of $345,000 and cumulative first five year tax savings of $846,000; representing
  • 5.1% and 12.6%, respectively, of total capitalized costs of $6.7 Million
• Restaurants.First year savings of $135,000 and cumulative first five year tax savings of $322,000; representing
  • 5.6% and 13.4%, respectively, of total capitalized costs of $2.4 Million
• Retail Facilities.First year savings of $96,000 and cumulative first five year tax savings of $165,000; representing
  • 6.4% and 11.0%, respectively, of total capitalized costs of $1.5 Million
• Jewelry Store..First year savings of $42,000 and cumulative first five year tax savings of $83,000; representing
  • 9.1% and 17.9%, respectively, of total capitalized cost of $464,000
• Capitalized Leasehold Improvements.1ST year savings of $92,000 and first 5 year tax savings of $192,000; representing
  • 9.9% and 20.8%, respectively, of total capitalized costs of $925,000
• Warehouse Facilities..First year savings of $365,000 and cumulative first 5 year tax savings of $783,000; representing
  • 3.9% and 8.3%, respectively, of total capitalized costs of $9.4 Million

We have performed studies for many types of commercial properties but this should give you some idea of the cash flow.

How It Works & Why a Cost Segregation "Study" is Necessary
The taxpayer must use a process called "cost segregation" in order to take advantage of this tax benefit. Our firm has the technical experience and systems to properly perform the cost segregation studies recognizing the highly technical tax rulings, IRS guidelines, and court cases to prepare an "accurate engineered cost segregation study".

Working with Your CPA or Attorney
Based on the above information, you can understand why it is not common for an accountant, CPA or tax attorney to perform the study required by the IRS. Most businesses have their own CPA or tax attorney and this process does not interfere with that relationship; rather, it is ancillary to their work.

Getting started: How to Obtain a Proposal at no Cost or Obligation and How the Process Works
We first "benchmark" with your CPA the potential tax savings at no cost to you to illustrate the potential for tax savings. Upon agreement to proceed, we complete the study which usually takes four to six weeks. We then provide your CPA or tax attorney with the revised depreciation numbers and the cost segregation study report. Let's get started!

Contact us today for a review and proposal at no cost or obligation. Phone (801)687-0877