If someone told you there are thousands of dollars hidden somewhere in your building, would you look for it? Medical practices are prime candidates for a cost segregation study, which can save thousands in taxes.
If someone were to tell you there are thousands of dollars hidden somewhere in your building, would you look for it? Of course. And thanks to numerous IRS rulings, procedures and court cases, a cost segregation study can help you find it.
What is a cost segregation study?
For tax purposes, anything physically associated with a commercial building is depreciated over 39 years. A cost segregation study breaks out the components of a building, identifying personal property, indirect costs and land improvements that can be depreciated over a shorter period of time, such as 5, 7, or 15 years, allowing accelerated depreciation of those assets.
Typical examples of separate components are parking lots and landscaping (15 years), cabinets (5 or 7 years) and interior doors (5 or 7 years). Although those may all sound obvious, the types of items that can be broken out are numerous and often not easily identifiable.