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Commercial Real Estate Cost Segregation | EF Cost Recovery | Free Consultation | North Dartmouth, Massachusetts

Commercial Real Estate Cost Segregation

Cost Segregation: What is it? A tax strategy approved by the IRS in 1997 to reclassify specific real property assets that usually receive a depreciation life of 39 years (commercial real property) or 27.5 (commercial residential) into "tangible personal property" that is treated as five (5) year property or land improvements which are treated as fifteen (15) year property for depreciation purposes. Due to improved treatment, portions of the electrical, plumbing, mechanical systems, and site improvements of a building along with hundreds of other components can be allocated into shorter lives translating into immediate cash flow. The Value of Money: This effectively increases taxpayer's depreciation expense in today's dollars. By recouping up to 40% of the building cost over the first 5 years as opposed to depreciating it over 39 years, translates into significant tax savings and taps into the concept of the "time value of money". How much cash are we talking about? On average, our Cost Segregation Study offers approx. $150,000 in additional depreciation per $1 million dollars in purchase or construction cost over the normal 39 year straight line method. History of Cost Segregation: Over 300 rulings, letters, and IRS Memoranda have provided documentation and significant case law for the support of Cost Segregation Studies: Hospital Corporation of America vs. The Commissioner is one of the landmark decisions which gave support to the way we review

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