Our accounting team can help you understand which deductions you can claim, as well as organize the necessary forms and documentation to make those claims. Additionally, the property management fees themselves are also tax deductible.
- Structured Sales as an alternative to 1031 or a TIC – As an alternative to TIC and 1031 – See CCIM article Jan-Feb O& page 18.
- Private Annuity Trusts
- Ways to reduce and avoid taxes – Chris Ashoff
- Funding IRA’s with commercial property
- Don Wood tax strategies
Cost Segregation Studies – Depreciation
What is Cost Segregation?
Cost segregation improves cash-flow and bottom-line for building owners
Cost segregation studies (CSS) have become an increasingly valuable but not commonly understood tax strategy that should be considered by virtually every taxpayer who owns, is constructing, renovating or acquiring a real estate facility.
Its tax benefits can be applied to various types of real estate: apartments, assisted living/nursing homes, auto dealerships, office buildings, hi-tech facilities, hotels/motels/resorts, manufacturing facilities, medical buildings, restaurants, retail space, warehouses and others.
Cost Segregation is an engineering-based approach to identifying assets within a building that can be reclassified into a much shorter depreciation class than the building itself. Real estate properties (and everything in them) are generally depreciated using a straight-line method over 39-years (27.5-years for residential properties). These properties are defined as real property.
Cost Recovery Solutions (CRS) can maximize your inherent tax benefit by identifying, classifying, and segregating the personal property components of the building, resulting in depreciable lives of 5, 7 and 15 years using accelerated depreciation.
Who can benefit from Cost Segregation?
To determine if a cost segregation analysis is appropriate for you, ask yourself the following questions: 1) Is the cost of your building (land excluded) at least $1M? 2) Have you purchased, constructed or renovated any property in the past 12 years? 3) Do you plan on retaining your property for at least the next few years? 4) Do you have net income that is currently taxed?
Cost segregation is a valuable service if you can answer “yes” to these questions.