Have you been considering purchasing your building? Or do you already own your existing building but plan on making improvements? A cost segregation study on the completed building can help improve your cash flow by deferring taxes, but it can also help on existing buildings.
A cost segregation study done before demolition begins can pull components out that you plan to dispose of. For example, if you plan to remove the existing lighting and replace it with new energy-efficient lighting, you need to know the cost of the old lighting system to dispose of it. A cost segregation study can identify the costs of the existing lighting system. Otherwise, the old lights will remain on the books as part of the original building cost. This would be a lost deduction until the building is fully depreciated (27.5 years or 39 years!).
Even if a cost segregation study is not suitable, many opportunities exist to identify shorter lives directly from construction documents or property appraisals. If a building purchase is on your horizon or you are planning to remodel your existing building, call LSL CPAs so we can optimize the available deductions related to your building purchase or remodel.
By Jeff Boxx, CPA
