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Cost Segregation Study Produces Significant Client Tax Savings

The purpose of a cost segregation study is to take an asset that is being inappropriately depreciated over a longer asset life, reclassify into a shorter, more accelerated asset life, and catch up on missed depreciation deductions. This is considered a change in accounting method and the rules relating to this change allow you to take a negative “catch up” all in one year.

Examples of Tax Savings We Have Provided to Our Clients

New Construction:

  •  100,000 square foot office building
  • $9.6 Million total construction cost
  • 22% of costs classified as Land Improvements
  • 12% of costs classified as Personal Property
  • NPV of tax deductions = $479,000

Purchased Property:

  •  165 unit apartment complex
  • $11.5 Million total purchase price
  • 15% of costs classified as Land Improvements
  • 19% of costs classified as Personal Property
  • NPV of tax deductions = $454,000

Existing Property:

  •  26,000 square foot office building placed in service 1998
  • $2.4 million total construction cost
  • 26% of costs classified as land improvements
  • 13% of costs classified as Personal Property
  • NPV of tax deductions = $152,000 (includes “catch-up” depreciation for prior years)

Interested in learning how a Cost Segregation Study may benefit your business?  Contact Vince Nadder.

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