What is Cost Segregation & How Can It Benefit Your Business?

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What is Cost Segregation & How Can It Benefit Your Business?

What is Cost Segregation?

Cost segregation is a strategic tax planning tool that allows purchasers (both companies and individuals) who have purchased, built or remodeled real estate of any kind favorable tax benefits and increased cash flow from accelerated depreciation deductions and deferral of both state and federal income tax. In addition, cost segregation allows for easier write-offs when an asset becomes obsolete or broken. This can include anything from printers and fax machines to manufacturing machinery. The experts at Orlando based CPA Accounting & Tax Services outline the top 3 ways cost segregation can help benefit your business:

How Can Cost Segregation Benefit Your Business?

  1. CPAs may recommend utilizing the cost segregation technique when a taxpayer constructs or purchases a building. It can be used even if a structure was acquired several years earlier, allowing you to reap the same tax benefits even after the current tax year has passed.
  2.   By obtaining an engineering report, purchasers of real estate are able to identify all costs related to the property that can be depreciated over the course of 5, 7 and 15 years, which affords tremendous tax benefits from these accelerated depreciation deductions. The report will segregate the assets into the 4 categories, which include land improvements, personal property, land and building components.
  3. Cost segregation is advantageous in that it includes the value of front-loaded depreciation deductions, write-offs of building components that need replacement and lower local realty-transfer taxes.

Let us guide you through you thorough the many complexities of cost segregation. Contact the professionals at  CPA Accounting & Tax Services to help guide you through tax season and beyond. We specialize in Business Accounting Services, Individual Tax Services, Tax Preparation, International Tax Services, Tax Planning and Tax Resolution Services. We have offices in Orlando, Florida and service clients worldwide. Find out how we can serve all of your accounting needs by contacting us today:  www.cpaaccounting.biz

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