Three Biggest Reasons to do Cost Segregation

It Is The Best Way to Depreciate

Cost Segregation of a 480,000 sf Office Campus 

Here’s why: US tax law says to depreciate buildings 39-year straight line. But, the law also says a Professional Engineer can allocate the cost among building components, which depreciate faster.  This is called Cost Segregation  Cost Segregation can change 20% to 50% of cost to 5, 7, or 15-year. You can find out how much we can help you with our free estimate, the best in the business.

Depreciation Acceleration

The chief benefit of Cost Segregation is depreciation acceleration and the commensurate reduction in taxes that it produces. This graph shows the typical depreciation changes resulting from one of our studies.  For this property, the first year depreciation increased by $1,000,000 and federal income taxes declined by $350,000.  In the first five years, depreciation increased by $3.2 million and taxes declined by nearly $1.2 million.  We can create a free estimate of cost segregation results for any commercial property, so any owner can evaluate his or her potential tax benefits from cost segregation.

Example of Capital Growth due to Cost Segregation

Wealth Creation

Cost Segregation accelerates depreciation for up to 50% of a building’s cost, concentrating it in the first fifteen years of ownership (blue-green lines). In turn, this shifts income taxes far forward, making extra cash available now.  By investing the extra cash from tax reductions, a property owner can create surprisingly large new wealth.  For example, the owner of the retail center in the graph to the right, will have an extra $1,000,000 in under ten years, indicated by the red line going straight up. Get this graph calculated for your building with our free estimate.