Increase Cash Flow and Opportunities
Everyone knows that a dollar today is worth more than a dollar tomorrow. Or, in our world, a tax deduction today is worth more than a tax deduction tomorrow. A cost segregation study is a strategic tax savings tool you may be able to leverage now to increase cash flow. Across the Mid-Atlantic, you won’t find a team of consultants with more cost segregation experience than RKL.
What Is a Cost Segregation Study?
If you’ve recently built, renovated, expanded or purchased a building, you may have some significant untapped tax savings in your property and facilities. Conducting a cost segregation analysis allows us to recognize the portion of a building’s cost that can be considered “personal property” or a “land improvement,” and depreciate it over a shorter period of time than the standard depreciation life of 39 years for a commercial building or 27½ years for a residential building.
What if you built, renovated, expanded or purchased a building in prior years? Current IRS rulings and procedures allow taxpayers to change prior accounting methods through cost segregation to take advantage of these previously understated depreciation expenses. This is done without amending your tax returns and can generate a relatively large tax deduction in the year of change, allowing you to meet current cash flow needs or to invest in your business.
Considering cost segregation? Our team can provide you with an analysis of the potential tax savings to allow you to make an informed decision.
Two Levels of Cost Segregation at RKL:
- Cost Segregation Analysis: Analysis of construction costs or to provide a purchase price allocation to determine the appropriate tax depreciable lives, methods and convention of each item identified through our study. The results are provided on an asset listing and provides sufficient detail for you to incorporate the segregated costs into your depreciation software.
- Formal Cost Segregation Report: Includes analysis as described above, plus a report detailing the approach, scope and methodology used in the cost segregation study. The report also includes specific IRS rulings, procedures, court case decisions and other tax authority supporting the positions taken in designating the assets identified, along with supporting photographs.
Benefits of Cost Segregation
This tax savings strategy offers several benefits for business owners. Consider how the following cost segregation benefits may help your business: