Cost Segregation

While most businesses and individuals take advantage of the tax savings achieved through building depreciation, few receive all the tax benefits they are due. Why? Most depreciate the total building cost over an extended life as real property, despite the fact that fifteen to forty percent of the building’s components may be considered personal property that qualifies for accelerated depreciation. Cost segregation could help you realize additional tax benefits that can substantially increase your cash flow.

What is cost segregation?

Cost segregation is the process of identifying, classifying, and valuing building components. Components with short depreciable tax lives are separated from building and land acquisition or construction costs. These short-life components can greatly increase depreciation deductions in early years of the building’s life. As a result, Windes has helped many property owners experience substantial tax savings and a significant increase in cash flow. Together with our Baker Tilly affiliates, we have performed hundreds of cost segregation studies.

Buildings with the greatest potential for tax benefits include:

  • Apartment complexes
  • Auto dealerships
  • Hospitals and medical centers
  • Hotels
  • Industrial and manufacturing facilities
  • Long-term care facilities
  • Mobile home parks
  • Office buildings
  • Recreation and sports facilities
  • Restaurants
  • Shopping centers and strip malls

Completed by an experienced team of engineers and our tax professionals, cost segregation studies bring recognized tax savings to building owners interested in retaining cash and real estate investment trusts (REITs) looking for decreased dividend payout requirements. As you consider ways to hold costs in check, optimize the timing of tax depreciation deductions, and retain or enhance cash flow, consider Windes. We can help make a difference in your bottom line.

If you think you qualify for these tax savings, please contact us for a complimentary benefit analysis based on your specific situation.

For more information, please contact:

James A. Cordova, CPA, MST
Jeffrey S. Fields, CPA, MST
Robert B. Henderson II, CPA, MST
Guy A. Nicio, CPA, MST
Christy E. Selogie, CPA, MST