Is your company planning to buy, build or remodel its facilities? Or has it done so within the last few years? If so, a cost segregation study could brighten your tax outlook for 2015.
A cost segregation study identifies property components and their cost, allowing you to maximize current depreciation deductions by using the shorter lives and faster depreciation rates available for the qualifying parts of the property. Precisely which components qualify depends on various factors, including:
- How the property is affixed to the building,
- Whether it’s designed to remain in place permanently, and
- How difficult it would be to move or remove.
But be mindful that the overall benefit of a cost segregation study may be limited in certain circumstances, such as when the business is subject to the alternative minimum tax or is located in a state that doesn’t follow federal depreciation rules. Also, passive activity loss rules can defer the benefits.
Cost segregation studies can be an excellent means for gaining faster write-offs on your real estate and construction projects. But, as mentioned, they involve many variables. We can help you decide whether now is a good time for a cost segregation study and, if so, assist you with the process. Contact us today!