Who can benefit from a cost segregation study? | National Asset Partners

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Who can benefit from a cost segregation study? | National Asset Partners

Commercial real estate owners and tenants who make qualified leasehold improvements should take full advantage of a cost segregation study. Cost segregation studies are intended to reduce present tax liability. What commercial property owners do not realize is that; Cost segregation studies can save owners thousands of dollars on a quarterly or annual basis by converting ordinary income activities to investment activities. This accepted tax planning strategy benefits property owners by deferring tax, accelerating depreciation deductions and improving cash flow.

Cost segregation studies can be applied to new construction properties, existing properties, acquisitions, redevelopment properties, and leasehold improvements. You may qualify for a cost segregation study if you constructed, acquired, remodeled or made leasehold improvements to an existing property after December 31, 1986. Also, you could have acquired your building or facility that was constructed prior to 1986, but was purchased in a taxable transaction after 1986.  Property owners that have constructed or purchased a facility after December 31, 1986 with a basis of one million and will retain the property for a minimum of 2 – 3 years can also benefit from a cost segregation study.  Many types of properties qualify for a cost segregation study.  Examples of properties that may qualify are office buildings, manufacturing facilities, banks, casinos, golf courses, apartment complexes, restaurants, auto dealerships, strip malls and hotels.

The Jobs and Growth Tax Act of 2003 establishes a new 50% bonus depreciation provision for qualifying property acquired after May 5, 2003. The Act also extends the availability of the 30% bonus depreciation deduction for property acquired through the end of 2004.  An extended placed-in-service date prior to 2006 applies for certain longer-lived property and transportation property.