Cost Tech Consulting's goal is to help real estate owners increase cash flow from their newly constructed buildings, remodels, purchased properties or fixed assets by accelerating income tax depreciation. We achieve this goal through our application of engineering and valuation techniques using Cost Segregation, Purchase Price Allocation or Revenue Procedure 2002-09 (retroactive change) studies.
Tax Benefit from Short-Lived Property
If your business owns or leases facilities, the depreciation deduction is one of the most significant, but often overlooked, opportunities to reduce your income tax liability. Whether your business is buying, building or improving a property, Cost Tech Consulting can help you get the most from your property’s income tax deductions by optimizing depreciation.
Real property is assigned a 39-year or 27.5-year straight-line depreciation period under the Modified Accelerated Cost Recovery System (MACRS). However, land improvements, certain fixtures and personal property, if properly identified, can have significantly more advantageous tax recovery periods. Without a cost segregation study, the cost basis of the shorter-lived assets are typically undifferentiated from the construction costs or purchase price. Therefore, the real property recovery period for these assets is often much too long. We use an engineering/valuation approach to identify shorter-lived assets in construction categories such as electrical installations, mechanical systems and finishes. The analysis can produce a substantial classification into shorter-lived property, which means a current and future tax deferral. Additionally, an accelerated 150% to 200% declining method, rather than the straight-line method, is used to calculate depreciation for these asset categories.