Cost Segregation Tax-Saving Study
If your company has purchased, constructed, or renovated a building (or plans to do so), KraftCPAs can help you get the maximum return on your investment. Our comprehensive cost segregation service can maximize your tax savings and increase the cash flow on your current or future real estate investments.
A cost segregation study can reclassify real estate assets to:
- accelerate your depreciation deductions
- reduce your tax liabilities
- maximize cash flow
How a cost segregation works
Building construction and renovation costs are generally depreciated over 27.5 or 39 years. But with an engineering-based cost segregation study, we can identify shorter-lived assets that are buried there – assets that can qualify for 5-year, 7-year, or 15-year write-off periods.
By reclassifying these assets and accelerating their depreciation, we can accelerate expenses and decrease your taxable income. As a taxpayer, you pay less tax during the early stages of a property’s life, and the present value of the tax savings can be tremendous. Under certain circumstances, these shorter-lived assets may also qualify for bonus depreciation of 50% or 100 % (phasing down in 2023).
Although the best time for a cost segregation study is the year in which the building is constructed, remodeled, or purchased, you can still reap the tax benefits on older projects. In fact, the IRS allows taxpayers to claim missed depreciation on older assets so long as they were placed in service after 1986 – without having to file amended returns.
How a study saves you money
For every $1 million of property you reclassify for faster depreciation, the present value of your increased cash flow from income tax savings approximates $175,000. To help you determine if cost segregation could be beneficial for your business, we’ll provide a no-cost, no-obligation consultation, including an estimate of tax savings and fees.
In many cases, the present value of the tax savings is six times greater than the cost of the cost segregation study itself.
“My Kraft tax advisors explained that the benefits of a cost segregation service would outweigh the costs. In fact, the cost segregation study KraftCPAs did for us resulted in $700,000 of present value tax savings — a huge return on my investment! I’ve been a client of KraftCPAs for decades. I highly recommend the firm and the cost segregation service. It’s a service that pays for itself.”
Larry Schmittou, L&S Family Entertainment, LLC