Maximize Your Depreciation and Minimize the Tax Burden of Your Real Estate Investments
As a business owner, considering all tax savings opportunities to increase cash flow, reduce your taxable income, and ultimately grow your business is a key aspect of strategic financial planning. An area that can be overlooked when mapping out savings is the fact buildings are considered long term assets. Businesses that build, purchase, remodel, or expand any kind of real estate can benefit financially through accelerating their building depreciation – creating significant savings on taxes.
Cost Segregation Studies (CSS) successfully allow property owners to reclassify certain costs out of these longer life assets and into shorter life assets. Commonly, costs are capitalized and depreciated for income tax purposes as real property, depreciable on a straight-line basis over 39 years (non-residential real property) or 27.5 years (residential real property). A cost segregation study identifies those costs that should instead be classified as tangible personal property (generally depreciable over 3 to 7 years) or land improvements (depreciable over 15 years) for income tax purposes.
Building acquisitions, renovations, expansions, and new construction are all good CSS candidates. CSS can even be prepared years afterwards, allowing a “catch up” of savings. By identifying and separating personal property assets from real property assets, owners can take advantage of substantial tax savings and depreciation deductions associated with fixed assets and related costs. Our team works with you to provide an in-depth analysis of the costs incurred to acquire, build, renovate, or otherwise expand a real estate holding positioning you to:
- Maximize current deductions by way of accelerated depreciation
- Recognize lower tax burdens
- Optimize after-tax cash flow
How We Deliver
While fully versed in federal, state, and local tax codes, SC&H Group’s Cost Segregation professionals bring a business centered mindset to each engagement. We have been engaged by developers, owner-occupied properties, and REITs nationwide, and have performed cost segregation and fixed asset review studies on real property assets totaling over $6 billion.
Our unique mix of experience and knowledge allows your enterprise to leverage every opportunity leading to exceptional results. Due to our commitment to quality, excellence, and fidelity, SC&H Group becomes a viable part of your team where strategy, planning, and goals are intimately aligned. Our areas of expertise include:
- Cost Segregation
- Defer tax liabilities and optimize near term cash flow by separating building components into proper asset classifications and recovery periods.
- Fixed Assets
- Correct improper taxation of fixed assets and expedite tax deductions or deferrals. Mitigate non-compliance and IRS audit risk with appropriate fixed asset capitalization.
- Tangible Property Repair Regulations
- Develop maximum tax deductions on real and personal property purchases. Timely reviews can unlock deductions from prior years, even those beyond the statute of limitations. Also, improve cash flow related to capital expenditures in the current and future years.