Cost Segregation Study
The Premier Tax Reduction Strategy for Real Estate Investors
What is Cost Segregation?
A Cost Segregation Study is a powerful tax strategy that enables commercial property owners to accelerate depreciation deductions and significantly reduce taxable income. By performing a Cost Segregation Study, owners can often deduct 20–30% of a building’s purchase price within the first year.
A comprehensive study combines a detailed engineering analysis with a tax-legal report to identify and reclassify eligible building components into shorter depreciation schedules. Through this process, ATS helps property owners increase near-term depreciation expenses, lower taxable income, and improve overall cash flow.
Benefits
- Pay Less Income Tax
- Generate a Tax Refund
- Increase Cash Flow
- Take advantage of investment opportunities
Example
John recently purchased a manufacturing building worth $3,000,000. Through the use of a Cost Segregation Study, John was able to write off 28% of the $3,000,000 purchase price in the first year creating tax savings of approximately $268,800 (assuming a 32% tax rate). With this money, John was able to purchase new production equipment and provide employees with year-end bonuses.
Conclusion
This is the brilliance of a Cost Segregation Study: Rather than taking small tax deductions over a long period of time, cost segregation allows you to front load these deductions and obtain large tax savings immediately. It maximizes the time value of money principal by giving building owners cash today rather than in the future. This allows owners to re-invest in their real estate portfolio or business.
Cost Segregation Service
Cost Segregation works by breaking down a building into its individual components and assigning a specific value to each component. These values are then applied using IRS-approved methodologies to ensure full compliance. To properly implement this strategy, a qualified professional must analyze the property and create a revised depreciation schedule based on the value and useful life of each component.
For over fifteen years, the professionals at Alternate Tax Solutions (ATS) have specialized in performing detailed Cost Segregation Studies. We offer a free preliminary analysis to determine whether your property qualifies for accelerated depreciation benefits. Once engaged, our team thoroughly documents each component of your building, develops a new depreciation schedule, and collaborates with your tax preparer to maximize the available tax savings.
Discover how our clients have leveraged ATS’s expertise to unlock substantial tax savings and improve cash flow. Join the many industries benefiting from strategic tax planning, and contact Alternate Tax Solutions today for your complimentary property analysis.
