Thousands of dollars in tax savings may be trapped in your building.
Set them free. �

Contact: Lynton Kotzin

If you own commercial real estate, the depreciation deduction is one of your most significant – and sometimes most overlooked – opportunities to reduce your income tax liability.

And if you own a commercial structure that you built, purchased or renovated in 1987 or later, and have not made it the focus of a cost segregation study, your depreciation expense may be understated, increasing your taxable income and reducing your cash flow.

What is cost segregation? It is a process of identifying personal property assets that often get lumped together within the real property asset. Identifying and reclassifying assets to their shortest possible depreciable life allows you to maximize your tax depreciation deduction, thereby reducing your current income tax obligations and increasing your cash flow. A cost segregation study allows you to recover various components of your building far more quickly: in just 15, seven or even five years.

Do we qualify? If you have acquired a new or existing structure or improved a structure, the proper engineering and financial reports can generally justify cost segregation, generating significant tax savings and increasing cash flow.

Cost segregation can be effective when the cost of construction, acquisition and improvements exceeds $750,000. Opportunities include:

• new construction and renovations;

• acquisitions of property;

• buildings that have not been studied and are depreciating over 27.5 or 39 years;

• all post-1986 real estate construction, building, acquisitions, improvements, expansion or renovation;

• existing property constructed anytime but placed in service after 1986; and

• office leasehold improvements.

Projects and property that typically yield substantial benefits include manufacturing plants, hi-tech facilities, warehouses, distribution facilities, apartment complexes, shopping malls, auto dealerships, financial institutions, health care facilities, hotels and motels, office buildings, recreational facilities, restaurants, supermarkets and retail stores.

Teamwork Ringel Kotzin Valuation Services provides cost segregation services in partnership with the Phoenix-based L.E.A.D.S. (Land Entitlement & Development Services) engineering firm. Our firms form an effective team in maximizing your tax savings.