What is Cost Segregation?
Cost segregation is the practice of separating personal property from real property to allow a more rapid depreciation of the personal property associated with the facility. Real property is depreciated over 27.5 and 39 years, while personal property is depreciated over as little as five years. Up to 60% of many properties can be segregated and depreciated more rapidly than the traditional real property schedules. How is cost segregation beneficial? • Do you own non-residential real estate (other than your primary residence)?
• Did this real estate (plus any improvements) cost in excess of $750,000?
• Was the property built, purchased or improved after 1986?
• If you lease real estate, have you made lease hold improvements in excess of $100,000?* * If your company’s owners own the real estate holding company from which you lease the property, they can also benefit from segregation of the property itself! If you answered YES to ANY of these questions, you may benefit from having your property or leasehold improvements segregated!
“Catch up” depreciation, which provides accelerated credit for depreciation in previous years, can amount to very significant tax savings.
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