A study is typically feasible for any commercial property with a cost basis greater than $1,000,000 (excluding land) and should be considered by any taxpayer who:
- Purchased, constructed or renovated a property since 1986
- Received property from an estate that will have the basis stepped up, or
- Purchased a partnership share
It is ideal to have a study completed for the year the building or improvements are placed in service. If this is not the case, IRS procedures do allow that taxpayers can "catch up" on the depreciation that was not claimed from the day it was placed in service. Therefore, results found from a Cost Segregation Study can be taken as a one year lump sum adjustment on your corporate tax return, and this can be done without amending prior year's tax returns. Our team performs the entire analysis and provides all necessary documentation to have these adjustments processed.
Tax benefits can vary by type of property, however greater benefits can generally be derived from properties with a higher percentage of the following:
- Special use equipment
- Interior finishes
- Land improvements
- Other non-structural components
Additionally, if you know you will be renovating or constructing new property, it is best to engage with us as soon as practical to achieve the maximum benefit. Owners can dramatically increase cash flow by understanding how buildings can be designed for accelerated depreciation of particular building components.
If you qualify, please click here to apply for a complimentary estimate of benefits.