When you have a property that you purchased, built or renovated, you are likely eligible to get tax savings with a Cost Segregation Study

Here is how it works: Building depreciation is generally classified as a straight-line 39-year cycle for commercial and industrial property or 27.5 years for residential rental property.

With a Cost Segregation Study, personal property of the building is looked at separately - thus accelerating depreciable lives for some components to 5, 7, or 15 years. This results in tax savings when you file.

If you are on extension, there is still time to get a study completed for 2022 returns.

Call Us To Get Started: 877.410.5040

Get Significant Savings With Look Back Studies

The best time to do a Cost Segregation Study is when preparing returns for the year a building was placed into service. But you can can perform a look-back on assets placed into service in a previous tax year. This allows you to claim a catch-up tax deduction on your building. Take a look these tax savings:

Office Building Look Back Study

Assumptions

Built: 2022
Building Cost: $
Tax Year: 2022
Effective Tax Rate: 45%
Discount Factor: 8%

Results

Total Reclassed Basis: $1,200,000
Remaining 1250 Property: $6,800,000
Land: $2,000,000
Total After Tax Net Present Value Benefit: $261,710
481(a) Adjustment: $603,052.51
1st Year Tax Savings: $299,885
Cumulative 5-Year Savings: $338,881

Reserve Your Team Now: 877.410.5040

Bonus Depreciation Is Decreasing

Bonus depreciation of 100% expired at the end of 2022. In 2023, when a building is acquired, renovated, and placed into service, bonus depreciation will be reduced to 80%. And percentages will continue to decrease each year:

In 2024 it will drop to 60%

In 2025 it will drop to 40%

In 2026 it will drop to 20%

In 2027 and beyond it will be 0%

So don't delay getting a building into service if it's ready now. You'll be leaving money on the table.

Start Your Study Today

877.410.5040 // info@scarpelloconsulting.com

About Scarpello Consulting

Scarpello Consulting provides clients with a variety of cost-savings measures based on tax incentives and regulation such as Cost Segregation Studies and §45L Reports. Through a sister company, Scarpello Group, the team can provide clients with turn-key data analytics. In the years to come, both teams strive to create the answers to unique business problems, focusing on identifying break-through cost-savings measures that allow businesses to operate more efficiently.

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