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The ABCs of cost segregation analysis

    • 8 posts
    May 29, 2012 7:11 PM EDT

    A cost segregation analysis or study can prove to be highly beneficial for you in several ways. First of all, if you are looking forward to increase your cash flow, you can use this analysis to achieve the desired outcome. In fact, with the help of this analysis, you can use accelerated depreciation deductions to your advantage in order to generate an instantaneous increase. Secondly, if you have been trying hard to reduce your income tax, this study can help you in getting a visible reduction. Moreover, you can also reduce your real estate property tax in order to save some more money. Last but not least, if you want to derive the maximum benefit out of previously misclassified assets, you can use this analysis as a tool for claiming ‘catch up’ depreciation on all such assets.

    Meanwhile, it is important for you to realize that if you are using any structure for business, you can enjoy the benefits of a cost segregation analysis. In fact, any structure that is being used as a rental property is considered to be eligible for this purpose unless otherwise specified. Nevertheless, some of the projects that can make the most of this study are airports, auto service centers, grocery stores, golf courses, and manufacturing facilities, to name few. Of course, there are many other projects that can enjoy the benefits of this study, such as industrial buildings and auto dealerships. Surprisingly, even leasehold improvements can benefit from this analysis.

    Nevertheless, if you want to enjoy the benefits of this study, you should get in touch with a firm that offers cost segregation services. However, if you want to obtain optimum tax savings, you must choose the firm in a wise and careful manner. First of all, you need to ensure that the firm selected by you can evaluate, identify, and classify assets with exceptional accuracy. In fact, it will be better if the firm knows a thing or two about engineering, construction, and taxation. Secondly, the firm should be familiar with the current laws in order to ensure that they can help you in optimizing your savings. Last but not least, if you succeed in finding a firm that not only knows about the prior rulings pertaining to individual assets but is also familiar with some of the court cases, you must not hesitate in approaching it at your earliest convenience in order to avail cost segregation services.

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