Cost Segregation is an IRS-guided process that enables property owners to capture significant tax benefits and increased cash flow by accelerating the depreciation of building costs. Typically, buildings are assumed to be Real Property (Section 1250) with a recovery period of 39 years. However, many building costs can be re-allocated to their proper asset classifications with recovery periods of 5, 7, and 15 years. These shorter-life classifications also have the added benefit of accelerated depreciation, effectively front-end loading the depreciation. For many property owners the result of this re-allocation of assets can be significant savings at a comparatively minimal cost.
Example: Consider an owner who buys or constructs a building at a cost (excluding land) of $5,000,000. If a Cost Segregation can re-allocate $1,000,000 of assets to 7 year property and $750,000 to 15 year property (not uncommon), aggregate depreciation deductions over the initial three years would increase from about $325,000 to $945,000.
Washington State Sales Tax Incentives- Our Cost Segregation reports also enable clients to take full advantage of state tax incentives available for new manufacturing, high-tech, and large distribution facilities.