Cost Segregation is a lucrative opportunity for commercial property owners to recoup a big chunk of their purchase or construction cost by applying an accelerated depreciation schedule to property usually classified as “real” (Section 1250) -but under improved IRS rulings – can be reclassified as “personal property” (Section 1245).
What are the qualifications for the study?
- Property cost minimum: $650,000 (Land Excluded)
- You pay federal income taxes
- You intend to keep the building for at least 2 years
- Asset was placed in service after 1987
“Cost segregation studies require a skill and understanding of case law that is vested only in specialist. The studies require a significant expenditure of time in preparation…Only those taxpayers with access to the professionals who can prepare a valid study may claim this tax benefit.” Ken M. Berry, IRS