REDUCE TAXES AND INCREASE CASH FLOW
Cost segregation is a strategic tool that allows companies to increase their cash flow by maximizing depreciation benefits for tax purposes. Specifically, it is an analysis of the capital expenditures or investment made in a building that results in the proper classification of cost between real and personal property for the purpose of determining tax deductions for depreciation.
A cost segregation study is used to identify, segregate and reclassify components of a project into asset classes, which can be depreciated over shorter period of time and using methods that accelerate the amount of the deductions. The value of the process is the increased cash flow generated by the tax savings realized through accelerated deductions.
IS YOUR STRUCTURE ELIGIBLE FOR COST SEGREGATION?
Although the optimal time to begin a cost segregation study is when plans to build remodel, or expand a building are first drafted, eligibility extends to:
- Buildings and facilities that have been newly constructed since 1987
- Buildings and facilities constructed before 1986, but acquired in a taxable transaction after 1986
- Building renovations and additions completed after 1986
BENEFITS OF COST SEGREGATION STUDIES
- Reduces income taxes; in addition, real estate taxes and personal property taxes may be reduced.
- Increases cash flow
- Maximizes tax credits
- Provides an opportunity to claim 'catch up' depreciation on previously misclassified assets.
- Provides information that is valuable in managing capitalized assets.
THE BENEFITS ARE BETTER THAN EVER
Recent tax law changes provide for additional bonus depreciation deductions for newly acquired personal property in addition to the regular depreciation deduction. The bonus depreciation is not allowed on real property acquisitions. Cost segregation studies will identify items that would otherwise be classified as real property and classify them as personal property qualifying for the bonus depreciation. The bonus depreciation will significantly enhance the cash flow benefits provided by cost segregation.
OUR EXPERTISE
Admiral Consulting's associates' extensive knowledge of cost segregation studies, and close relationships with national consultants, provide the expertise needed to maximize the benefits of cost segregatation.