Cost Segregation
Williams Benator & Libby, LLP Tax Consultants want to partner with you to increase your depreciation deductions, reduce your income taxes, and increase your cash flow.
If you own real estate used in a business that was acquired in the last 10 years and you pay income taxes, a cost segregation study could uncover a wealth of hidden income tax deductions available to you. Our experience in business consulting, income tax consulting, and cost segregation studies, gives us a broad base of knowledge with which to provide you with superior service.
Cost Segregation Study
Significant savings can be realized by your business by accelerating depreciation deductions. A properly conducted and properly documented Cost Segregation Study provides evidence and support for claiming depreciation deductions over a much shorter time period. This saves you tax dollars today and keeps your cash in your pocket instead of the government's pocket.
- How do you accelerate depreciation deductions? When real estate is purchased, the owner will typically record the cost as land and buildings. Our experts can break out the cost of land improvements, fixtures, and equipment that can be depreciated over a much shorter period.
- Do I really need a study? In order to support depreciation deductions on personal property that would otherwise be part of the building, the IRS requires that a study be prepared to properly compute and document the personal property.
How Much Can You Save?
As a result of paying less tax in the early years of owning a facility, improved cash flow is achieved. Depending on the type of facility, we can typically reclassify 15% - 50% of the cost of the property to shorter lived assets. The present value of the income tax savings for every $100,000 of personal property identified is $18,000 for 5 year property , and $10,000 for 15 year property.
EXAMPLE: In a recent study we performed for an apartment complex, we were able to identify $3.3 million of 5 year property and $1.7 million of 15 year property that had previously been classified as 39 year real property. The result was net present value savings to the owner of over $800,000 from income taxes alone. In addition, their state property taxes will be greatly reduced due to the accelerated depreciation.
Who Can Benefit?
The owner of real estate used in a business, eligible for depreciation, and subject to income tax (including pass-through entities with owners subject to tax), can benefit. The greater the cost of the property, and the more recent the purchase, the greater the benefit. If you have purchased a new building in the last 10 years for over $1 million, and you have not done a study, you need to call us.
If you own real estate used in a business and pay income tax, call or email Williams Benator & Libby, LLP to receive an estimate of the benefits a cost segregation study can provide.
