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How Does a Cost Segregation Study (CSS) Work? Business Articles | July 14, 2010
How does a Cost Segregation Study provide a tax benefit to property owners? ?This article breaks down the details of Cost Segregation.
Typically Building costs are generally classified for federal income tax purposes into three categories.? Each has a different depreciation recovery period and method under the Modified Accelerated Cost Recovery System (?MACRS?):
TANGIBLE PERSONAL PROPERTY
Depreciates Over???? 5 OR 7 YEARS
At a 200% Declining Balance
LAND IMPROVEMENTS
Depreciate Over???????? 15 YEARS
At a 150% Declining Balance
RESIDENTIAL RENTAL ? REAL?PROPERTY
Depreciates Over??????27.5 YEARS
Straight Line (Residential)
COMMERCIAL ? REAL PROPERTY
Depreciates Over????? 39 YEARS
Straight Line (Commercial)
In most cases, when a property is placed in service, the straight line method is used.? In some cases, the obvious short life items are separated out and the remainder depreciates over the long term straight line method.
By reclassifying components from 39 year real property (subject to straight line)? to five or seven year personal property (qualifying for 200% Declining Balance) Cheap Air Max DLX , the recovery period is greatly compressed.? In addition to the reduction in the recovery period, all five and seven year property is depreciated at a 200% declining balance which further accelerates the depreciation.? This provides the building owner the ability to greatly increase the depreciation for a property and thus significantly reduces the building owners taxable income and current income tax liabilities.
Our Engineering Based Cost Segregation Study will help identify items that should be properly classified as tangible personal property or land improvements, rather than real property that?is depreciated over 39 years.??The tax benefits begin in the first tax year and continue throughout the depreciable life of the identified assets.
For example, a taxpayer that owns a manufacturing facility could classify the cost of certain equipment foundations, exhaust and ventilation systems Cheap Air Max Deluxe , and electrical distribution as tangible personal property.? Certain site improvements such as landscaping, underground utilities, and site lighting could qualify as land improvements.
Knowing?the difference is critical.? So is the ability to support and document the decisions.??That is?why you need expert advice.? Identifying items to be reclassified is only half the battle.? The other half is to determine the costs? legitimately associated with each item.??The complication is locating single-item costs.? For example, suppose you know that a portion of your facility?s electrical distribution for specific manufacturing equipme. Replica NFL Jerseys Replica Hockey Jerseys China Replica Jerseys From China Replica Baseball Jerseys Sale Replica Football Jerseys Online Cheap Replica Jerseys China Cheap Replica College Jerseys Cheap Replica Basketball Jerseys Cheap Replica Jerseys Free Shipping Cheap Replica Jerseys Online |
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