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Thinking about buying commercial property? Are you familiar with costsegregation? A cost segregation study could be very beneficial to yourbottom line.Cost segregation is a popular, yet little known technique whichprovides buyers of commercial property with tremendous tax benefits.How? By reclassifying components and improvements on a commercialbuilding from real property to personal property. Why is this souseful? Because it permits the owner to accelerate their depreciationfrom the typical 27.5 to 39 years to a 5, 7, or 15 year depreciationschedule. You can see the potential for reduced taxes and improved cashflow.So how does it work?First, does your property qualify? The answer is yes if you purchased,constructed, or improved the property after January 1, 1986. You mustalso anticipate holding the property for at least a few years.If your property qualifies, you will need to perform a cost segregationengineering study. It is best to have a study completed for the yearthe building or improvements are put into service. However, the IRSdoes permit taxpayers to catch up on unclaimed depreciation that wasnot claimed from day one. In order to complete a study, a costsegregation study will probably need the following: 1) your current taxschedule 2) building cost information 3) Change orders. Once the study is complete (expect 4-6 weeks), your CPA will be able tofile the necessary schedules to accelerate your depreciation. That is the basics. Discuss cost segregation with your CPA and look fora qualified company to provide the cost segregation study. Depending onthe results, you could see thousands of dollars in tax savings. Article Tags: Cost Segregation Study, Commercial Property, Cost Segregation, Segregation Study

Depreciation,Life,Can,Shortene

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