A Cost Segregation study is a detailed analysis conducted by tax professionals, engineers, or specialized consultants to identify and separate the various components of a commercial or rental property for tax purposes. The objective of the study is to reclassify assets from longer depreciation periods to shorter ones, in order to accelerate tax deductions and improve cash flow for the property owner.Â
During a study, the property is thoroughly examined, and its components are categorized into different asset classes, each with its own depreciation schedule according to the IRS guidelines. These asset classes typically include:
By identifying and segregating these assets, these studies allow property owners to maximize their tax savings and increase cash flow. It’s important to note that a study should be performed by qualified professionals, as it requires a deep understanding of tax law, construction techniques, and engineering principles.
A Cost Segregation study helps to identify parts of a building or its improvements that can be depreciated faster, leading to tax savings. A building or its improvements may be eligible for such a study if:
At Source Advisors, our team of experienced tax professionals, help companies maximize their tax savings and increase cash flow with Cost Segregation that can help drive overall growth.Â
