Cost Segregation Studies

The #1 Tax Strategy for Real Estate Investors

What is Cost Segregation?

A cost segregation study allows a building owner to take a large depreciation deduction which reduces their taxable income. With a Cost Segregation Study, a building owner can write off 20-30% of their building’s purchase price in the first year.

Through an engineered assessment of your building, ATS can reclassify components of the building over a shorter cost recovery period. This reclassification will increase your depreciation expense in the near term, which results in lower pre-tax income and a lower tax bill

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Manufacturing

Vacation Rentals

Apartment Buildings

Benefits

  1. Pay less income tax
  2. Increase cash flow
  3. 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 invest in growing their real estate portfolio or business.

Cost Segregation Service

Cost Segregation is implemented by breaking down a building into individual components and assigning a value to each component. These values must be applied through IRS-approved methods. To implement this strategy, a professional is needed to analyze a building and build a new depreciation schedule based on each component’s value and the rules surrounding its useful life. The professionals at Alternate Tax Solutions have been performing Cost Segregation studies for fifteen years. We will perform a free analysis for any property to determine if the taxpayer can benefit from accelerated depreciation. We then work to document all components of the building, provide a new depreciation schedule, and help the tax preparer apply all benefits. For a free analysis on your building, please contact our team today. See what our clients had to say about the savings Alternate Tax Solutions helped their business achieve. “Join the many industries taking advantage of revenue opportunities through applied tax strategy. Contact Alternate Tax Solutions today!

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