COST SEGREATION = TAX SAVINGS
Cost Segregation is a VERY BENEFICIAL tax angle used by real estate owners to ACCELERATE DEPRECIATION deductions.
In the past it was primarily used by large accounting firms and larger clients. The ability for smaller building owners to utilize these techniques is now becoming popular.
It takes an engineering study and an accounting firm that understands the issues.
Generally here is how it works…..
An engineering study is completed to identify components in a buiding that can be depreciated over 5, 7 and 15 years instead of 39 years for commercial property and 27.5 for residential property.
We then prepare what is called an ACCOUNTING CHANGE and the prior year(s) of lower depreciation are now adjusted in one year!