Tax Strategies To Increase Your Cash Flow
Cost segregation is a sophisticated tax planning strategy applicable to building owners or renters. The goal is to identify tax savings and increase cash flow through accelerated depreciation deductions and deferring federal and state income taxes.
Cost segregation, or allocating the cost of a building’s components into appropriate classes of personal and real property, is used to shorten the depreciation recovery period. The analysis may be conducted on current and prior building costs and applies when a building is constructed, purchased, expanded or remodeled. Real property is typically depreciated over 39 or 27.5 years compared to reclassified property, which may be depreciated over 3, 5, 7 and 15 years.