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Typically, when an investor
purchases a commercial building,
the IRS allows the cost of the
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period of 39 years. That’s a very
long time to recover your cost
and that’s just for the portion of
the cost allocated to the building
itself, not the land it sits on.
Since land doesn’t depreciate and
lose its useful life, the IRS doesn’t
allow for this portion of the
purchase price to be depreciated
for tax purposes. For example,
if you purchase a building for
$750,000 and the land is valued
at $112,000, that leaves $638,000
left to depreciate over the next
39 years. That equates to an
annual tax deduction of just over
$16,000 per year.
Cost segregation studies are used
to determine the allocation or
reallocation of the total cost of the
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classes and recovery periods. This
By Tina Moe, CPA
WANT TO WRITE OFF
YOUR COMMERCIAL BUILDING OR
RENTAL PROPERTY FASTER?
WHATYOUNEEDTO KNOWABOUTTHE
COST SEGREGATIONANALYSIS!
SOAR TO SUCCESS
/
F
EBRUARY
2017
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Core Business Strategies