The Purpose of Cost Segregation Studies
Cost segregation is part of an overall tax strategy that utilizes accelerated depreciation deductions to defer a building owner’s tax liability and increase cash flow. A cost segregation study identifies building assets that may qualify for accelerated depreciation. Ideal cost segregation projects are commercial or residential real estate that has been constructed, acquired or significantly renovated.
Ideal Timeframe for a Cost Segregation Study
The year a commercial or residential project was placed is the is the ideal time to complete a cost segregation study. Buildings placed in service in prior years are also eligible and can be great candidates for a cost segregation study. This is possible due to the IRS catch-up provision that allows you to realize any missed depreciation without having to file an amended tax return.
Cherry Bekaert’s Cost Segregation Services Can Provide:
- A substantial reduction in tax liabilities and lower tax bracket status
- Reduced current year estimated payments
- Accelerated depreciation
- Increased cash flow
- The opportunity to claim catch-up depreciation from previously misclassified assets
- The ability to write-off building components as they are replaced
