A cost segregation study identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, which reduces current income tax obligations. Personal property assets include a building’s non-structural elements, exterior land improvements and indirect construction costs.The primary goal of a cost segregation study is to identify all construction-related costs that can be depreciated over a shorter
tax life (typically 5, 7 and 15 years) than the building (39 years for non-residential real property).Personal property assets found in a cost segregation study generally include items that are affixed to the building but do not relate to the overall operation and maintenance of the building.
Land Improvements generally include items located outside a building that are affixed to the land and do not relate to the overall operation
and maintenance of a building. Reducing tax lives results in accelerated depreciation deductions, a reduced tax liability,and increased cash flow.
Read more about Cost Segregation Study: Property Asset Classification, Eligibility, Cost Segregation Study Process, Tax Benefits of Cost Segregation, Downsides To Cost Segregation Studies
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