Is there really another way to save money with commercial real estate even if you are a tenant? (You bet!)

In this months issue we discuss all of that and provide other great tips!

Click here for the December 2009 Edition to the Tenant Buyers Bottom Line Secrets

Do you own depreciable real property?
Are you constructing or purchasing real property?
Are you expanding your existing facility?
Do you have extensive leasehold improvements?

If you answer “yes” to any one of these questions, there is a service that I provide that could save you a significant amount of taxes! The service I am speaking of is a Cost Segregation Study.

This is a little known process designed to legally recapture thousands of dollars using a qualified professional to perform this special study.

What is a cost segregation study and what is it worth? A cost segregation study is an analysis, using an engineering approach acceptable to the Internal Revenue Service, to reclassify costs from the long depreciation lives of 27, 31 and 39 years to 5, 7 and 15 years. The benefit of a study is the net present value of tax savings generated as a result of accelerating depreciation expense. This amount can be significant meaning tens of thousands of dollars in many cases.  

Studies are done not only for property being currently purchased or constructed or improved, but also for buildings placed in service as early as 1987. Taxpayers can reclassify costs that qualified for shorter lives and can “catch-up” those missed deductions immediately. You don’t have to spread the missed deductions over four years anymore. As you can imagine, these amounts are usually quite large and result in big tax savings.

The Internal Revenue Service has made it clear, through various rulings, procedures and court cases, that they will not accept anything less than a Cost Segregation Study using a construction and an engineering approach. My study is comprehensive and well documented and in the format acceptable to the Internal Revenue Service.

By Richard A. Blum, CPA, JD, LL.M.

Please call Mr. Blum directly at  (704) 770-8790  (704) 770-8790 or e-mail at Rblum@carolina.rr.com if you would like to further discuss these cost segregation studies or if you have any questions.