How Much Money Could You Save with a Cost Segregation Analysis?

Many commercial real estate investors think that a simple depreciation schedule is enough to capitalize on depreciating assets. However, with a cost segregation analysis, you can significantly increase your cash flow and save thousands of dollars in taxes. In this blog, I’ll explore how much money you could potentially save with a cost segregation analysis.

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Let’s say you recently purchased commercial property for $1 million. Typically, a depreciation schedule would allocate the cost of the property over 27.5 years. However, with a cost segregation analysis, a qualified professional can segregate the building’s assets into shorter-lived property categories, which can be depreciated more quickly.

This means that you can write off more of the property in the first few years of ownership, significantly reducing your tax burden. In fact, after a cost segregation study, you can deduct $300-400,000 immediately from your taxable income.

If you only invested $100,000 of your own money and borrowed the other $900,000, you’ve only spent $100,000 on the property, but you’ve received a $300,000 deduction. As a result, you’re getting a huge return on your investment in the property, without having to fork over additional cash.

Now, let's say you’re classified as a real estate professional with a $100,000 salary. Because you can apply your $300,000 deduction to offset taxable income, you’re only paying taxes on $700,000. This significantly reduces your tax burden, freeing up more cash flow to reinvest in your business.

At Engineered Tax Services, we’re national experts in the field of cost segregation and its tax benefits. We’ve completed over 30,000 cost segregation studies in the past 20 years, saving our clients millions of dollars in taxes.

We work with your CPAs and attorneys to help you navigate the complexities of tax law and maximize savings. Our reporting process includes a detailed engineering report and we work seamlessly with the IRS for minimal disruption to your business.

Conclusion:

A cost segregation analysis is a powerful tool for commercial property owners looking to maximize their cash flow and tax savings. By accurately segregating assets and reclassifying property, you can reduce your tax burden and get a higher return on your investment. So why wait? Contact Engineered Tax Services today and find out how we can help you save thousands of dollars in taxes.