Cost segregation studies have historically provided our clients with a means of deferring taxes and increasing cash flow. However, newly finalized U.S. Repair Regulations provide yet another reason for property owners to implement a cost segregation study.
In addition to providing taxpayers with guidance on how to treat expenditures as either deductible repairs or capitalized assets, the Repair Regulations also require property owners to segregate certain structural components and building systems into units of property.
Cost Segregation Studies
Due to the induction of the Final Repair Regulations, we now segregate building structural components and systems into the following units of property when preforming a cost segregation study:
- Building Structure, including roof, walls, foundation, etc.,
- HVAC System;
- Electrical System;
- Gas Distribution System;
- Fire Protection and Alarm System;
- Security System;
- Elevator System;
- Escalator System.
Segregating the building structure and systems into the units of property above can help your business utilize the Repair Regulations and effectively account for future tenant improvements and building systems when they are removed or upgraded.
In light of the new 3.8% Medicare Tax on net investment income which could materially increase your overall tax rates, it is now more important than ever to consider cost segregation studies. To discuss having a cost segregation study performed for your business, please contact Dave Phelps, Scott Cress, or Kristen Howard today at (513) 241-8313.