What is a Cost Segregation Study?
Cost Segregation Study is a tax planning strategy that gives real estate owners the chance to accelerate depreciation deductions. The best time to do a Cost Segregation Study is the first year the property is placed in service.
The Normal depreciation period for real property:
The goal of a Cost Segregation Study is to identify all property-related costs that can be accelerated and depreciated over 5,7 and 15 years.
Cost Seg Study Illustration: Breaking Down Components of a Building
A Commerical building with Cost Seg Study has several components with their own depreciation:
Cost Seg Study Illustrated
In the example, the additional tax savings in the first year could be upwards of $35-40K with a Cost Segregation Study.
Cost Segregation Study Benefits
The best time to do a Cost Segregation Study is the first year the property is placed in service. However, you have the ability to perform a study retroactively and receive tax benefits.
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