TRUSTED ADVICE. SIMPLIFIED SOLUTIONS.
What is Cost Segregation?
A Cost Segregation study is a strategic tax planning tool widely used by real estate investors and property owners to accelerate depreciation deductions on their federal tax returns. The accelerated depreciation deductions can result in significant tax savings.
Typically, properties are depreciated over 27.5 or 39-years for federal tax purposes when acquired, constructed or renovated. However, there are assets included in the cost of the building that should not be depreciated over 27.5 or 39-year life. Cost Segregation studies fix this issue by properly reclassifying property into 5, 7 or 15-year lives.
Benefits
Increased Cash Flow
Lower tax liabilities allows property owners to grow their business by reinvesting the savings into their business
Future Opportunities for Savings
As assets are removed from service later, cost segregation studies make it easy for future partial asset dispositions and write-offs
Who conducts cost segregation studies?
These studies should be prepared by an individual with expertise and experience in both federal tax and engineering. Cost Segregation studies require in-depth knowledge of both tax law and engineering. Experts at Align Tax Consulting prepare studies correctly and will defend work if challenged under audit by the IRS.
Ideal Candidates
Real estate investors or property owners that build, purchase, remodel or expand real estate can generate tax savings via a Cost Segregation Study
- Commercial, industrial or residential rental properties
- Owner-occupied commercial or business properties
- Section 754 and 743(b) Step-Up-In-Basis Transactions
- Properties with a basis more than $350,000
- Properties placed in service after 1986
- Companies with significant amount of fixed assets
Interested in a Cost Segregation Estimate of Savings?
With just a few details, we can quickly estimate your potential savings!
