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Cost Segregation — A Tax-Savings Tool for Real Estate Purchasers

For taxpayers constructing a new building or purchasing an existing one, cost segregation is the key to achieving enhanced depreciation deductions and simpler property write-offs. Each real estate asset can be segregated into four categories: personal property, land improvements, buildings, and land. The difficulty lies in separating tangible personal property from the building’s structural parts. Determining which property-related costs can be depreciated over time is the main goal of cost segregation studies.

While taxpayers need be mindful of pursuing cost segregation too aggressively, this tool can lead to substantial tax savings if approached carefully. Importantly, cost segregation studies should be used when the expenditures for a structure are at least $750,000.

Our Approach to Cost Segregation Studies

With a full understanding of the legislative, regulatory, and judicial guidance on cost segregation, InnovaTax conducts thorough cost segregation studies. Our team of data professionals evaluates all available reports, inspections, and records to achieve the maximum tax savings for our clients.