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The Hultquist Blog

Own Commercial Real Estate? Write it Off Faster with Cost Segregation…

Have you heard of a cost segregation analysis? This tax planning idea can save you a lot of money. Tax planning is all about ideas, being creative, and seeing how all the puzzle pieces fit.  And a cost segregation analysis can be one of those ideas to have in your arsenal.

Let me give you an example:

Let’s say you buy or build a commercial property for $1 million…it could be for your business or just for investment.

Most CPA’s will put this on a tax return like this – $200,000 will go to land, which cannot be written off, and the other $800,000 will be written off over 39 years. That’s a long, long time to write-off $800,000!

But there can be a way to write this off much quicker with something called cost segregation.

A cost segregation analysis can break down that $800,000 into smaller components that can be written off quicker. Parts of that building may be 5, 7 or 15 year property that will give you larger depreciation deductions earlier in the buildings life. This can save you a tremendous amount of taxes!

So, if you own or invest in commercial real estate, even if you have owned it for many years, take this idea to your CPA, it could save you a lot of money!

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