Filing a Change in Accounting Method- Form 3115- Part 2 of 2

Cost Segregation is a specialized tax strategy that involves identifying and reclassifying specific components of a commercial property for tax purposes. Instead of treating the entire property as a single asset subject to a long depreciation period (typically 39 years for commercial buildings), cost segregation allows specific components to be reclassified into shorter depreciation periods such as 5, 7, or 15 years. This reclassification accelerates depreciation deductions, resulting in significant tax savings.

Maximizing Your Tax Savings

The beauty of combining cost segregation with Form 3115 lies in its potential for significant tax savings. By accelerating depreciation deductions, you can:

• Reduce your taxable income in the near term
• Improve cash flow through tax savings
• Potentially qualify for bonus depreciation on specific property components

Remember, the IRS scrutinizes these filings closely, so accuracy and compliance are paramount. Don't shy away from seeking expert help to navigate this complex but rewarding process.

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Avoiding Common Pitfalls

While the benefits of cost segregation and Form 3115 filing are substantial, there are potential pitfalls to watch out for:

• Incomplete Documentation: Ensure your cost segregation study is thorough and well-documented.
• Miscalculations: Double-check all figures, especially your Section 481(a) adjustment.
• Missed Deadlines: Be aware of filing deadlines to avoid losing out on potential benefits.
• Overlooking Recapture: Accelerated depreciation may lead to higher taxes upon property sale due to depreciation recapture.

By being mindful of these potential issues, you can navigate the process more smoothly and maximize your tax benefits.

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The Road to Tax Savings

Embarking on the journey of cost segregation and Form 3115 filing can be complex, but the potential rewards make it a worthwhile endeavor for many property owners. With careful planning, accurate documentation, and expert guidance, you can unlock significant tax savings and improve your cash flow.

To find out your savings, click https://legacycostsegregation.com/

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