Cost Segregation is a tax strategy that commercial property owners use to reduce their tax burden and increase cash flow. This is achieved by identifying specific, individual building components which can depreciate at an accelerated rate, compared to the building as a whole.
If you’re a real estate owner or investor, BRS could help you significantly reduce your taxable income now and years into the future by completing a Cost Segregation analysis.
What is a Cost Segregation Analysis?
In the US, commercial and residential rental properties
depreciate over 39 years and 27 1/2 years respectively,
whereas other assets depreciate over 5, 7, or 15 years.
In a Cost Segregation analysis, certain interior and exterior property components are identified as separate from the building’s structural features. Because these other assets depreciate more quickly than the building itself, they can be used to make impressive tax deductions and deferrals to increase cash flow.
Benefits of Cost Segregation:
- Increase cash flow
- Individual real estate components can be depreciated at a faster rate than the entire building
- Qualified assets are eligible for 100% deductions in the first year
- Losses identified in year one can be carried forward, potentially resulting in years of reduced taxes
If you have large ongoing real estate interests, or are considering building or expanding in the future, Cost Segregation could be for you.
You would likely benefit from a Cost Segregation analysis if:
- You own or invest in commercial real estate
- You are planning or have previously constructed, purchased, expanded, or remodeled commercial or rental real estate
- You own residential rental property