Accelerate the Tax Deductions on Your
Commercial Building or Residential Rental Property
Quickly recoup your down payment
The problem with the normal 39-year commercial property depreciation schedule is that it takes 39 years. But it doesn’t have to—at least not for your entire property. As Tax Doctors, one of the “tax surgeries” we’re known for is cost segregation.
With cost segregation, instead of depreciating your entire building as a whole, we break it down into its component parts and depreciate everything separately.
The results of these specialized tax services can be significant. In fact, there’s a good chance you can get such a high level of immediate tax deductions that you will essentially recoup your down payment in year one. Typically we see situations like that of one of our clients, who got a $400,000 deduction on their $1,000,000 building in the year of purchase—a nearly 16x increase over the $25,641 deduction they would have had (i.e. 1,000,000 divided by 39) without cost segregation.
How does cost segregation work?
We start by having an independent engineer analyze your building and break it down into its various components. Then we take that information and, based on applicable tax law, assign the various components to one of four available depreciation schedules: 5-year, 7-year, 15-year or 39-year.
When looked at in this way the carpets, for example, are categorized as 5-year assets, while fences get put on the 15-year asset schedule.
As a certified member of the American Society of Cost Segregation Professionals, Jared Montoya, CPA, EA has extensive experience in this field. Call us at 619-578-2514 today to learn more about the tax benefits and implications of this tax strategy.