Approved IRS Method Allows You to Accelerate Your Depreciation

Are you a commercial property owner? Were you aware there is an approved IRS method that allows you to accelerate the depreciation? Cost segregation studies provide commercial property owners with the means to take advantage of accelerated depreciation.

Cost segregation is a popular, yet misunderstood application which provides buyers of commercial property with substantial tax advantages. How? By reclassifying components and improvements on a commercial building from real property to personal property. Why is this so advantageous? Because it allows the owner to accelerate their depreciation from the typical 27.5 to 39 years to a 5, 7, or 15 year depreciation schedule. Thus the property owner realizes a reduction in taxable income with an increase in cash flow.

What does it take to get started?

First, does your property qualify? If you purchased, built, or remodeled the property after January 1, 1986. You must also anticipate holding the property for at least a few years.

If your building qualifies, you will want to perform a cost segregation engineering study. The best time to have a study completed is when the building is purchased or improved. However, the IRS does allow taxpayers to catch up on unclaimed depreciation that was not claimed from day one. In order to complete a study, a cost segregation study will probably need the following: 1) your current tax schedule 2) building cost information 3) Change orders.

Once the study is complete (it will probably take 4-6 weeks), your CPA will be able to complete the required forms to accelerate your depreciation.

That is it in a nutshell. Discuss cost segregation with your CPA and look for a qualified company to provide the engineering study. Depending on the results, you could see thousands of dollars in tax savings.

Jeffrey Roh is a cash flow specialist and owner of Profast Billing Solutions. To learn how to accelerate depreciation on your commercial property, visit http://www.profastbilling.com/cost-segregation-services.php.