Strategy 02
Cost Segregation
Reclassifies real estate components into shorter depreciation schedules to accelerate tax deductions.
Discuss this strategyWhat it is
A cost segregation study is an engineering-based analysis that breaks a building into its components and reclassifies short-life property (5-year, 7-year, 15-year) out of the default 27.5 or 39-year real property schedule. The reclassified portions can then be depreciated more quickly, and qualifying property may be eligible for bonus depreciation. The result is a larger depreciation deduction in the early years of ownership, which defers federal income tax on rental and operating income from the property.
Who it is for
Owners of newly acquired, constructed, or substantially renovated commercial or residential rental property, typically with a depreciable basis above $500,000 where the time value of accelerated deductions justifies the cost of the study.
Related strategies
Three strategies that travel with this one.
Strategy
Entity Optimization
Structuring business entities (S-corp, C-corp, LLC, partnership) for optimal tax treatment.
Strategy
Ordinary Loss Treatment, Section 1244
Ordinary loss treatment for losses on qualifying small business stock.
Strategy
Charitable / Trust Planning & Other Advanced Strategies
Donor-advised funds, charitable remainder trusts, dynasty trusts, and related estate-and-tax planning structures.
Next step
See whether this strategy fits your facts and circumstances.
The first call is fact finding only. We tell you whether this strategy belongs in your plan, and what would have to be true for it to apply.
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