Taxpayers can accelerate tax depreciation deductions and thereby reduce taxes on new and existing buildings through our cost segregation studies.
Recent tax litigation and subsequent IRS pronouncements has created an opportunity for the savvy investor to realize significant tax benefits through greater depreciation on real property. The tax court recently ruled that certain costs, which had been classified as building subject to a 39-year depreciable life, should be classified as personal property subject to a 5, 7, or 15-year depreciable life. Further, the IRS allows taxpayers to go back as far as 1987 to reclassify these personal property items. A retroactive one-time catch-up depreciation deduction can be elected in your current tax year without amending all prior items.
On the average, for every $100,000 of 39-year property reclassified to 7-year property, the present value of the net cash flow at 8% associated with the acceleration of depreciation is approximately $20,000. In addition, a dollar invested today at 8% will be worth $20 in forty years.
These benefits can be obtained on existing buildings acquired as far back as 1987, new buildings currently undergoing renovation, remodeling, or expansion, leasehold improvements.