Who is Cost Segregation for?
Ideal Asset Types for Cost Segregation
Commercial Real Estate: Buildings such as office spaces, retail outlets, and warehouses often contain numerous personal property assets that can be reclassified for accelerated depreciation.
Residential Rental Properties: Multi-family units, apartment complexes, and other rental properties can benefit from identifying assets like appliances, carpeting, and specialized fixtures.
Manufacturing Facilities: These often contain a mix of structural and non-structural assets, making them prime candidates for cost segregation.
Hotels and Resorts: From furniture to specialized amenities, these properties have a plethora of assets that can be reclassified.
Medical Facilities: Hospitals, clinics, and specialized medical centers contain equipment and fixtures that can benefit from accelerated depreciation.
Restaurants: Assets such as kitchen equipment, specialized lighting, and interior decor can be ideal for cost segregation.
Agricultural Facilities: Greenhouses, storage facilities, and processing plants in the agricultural sector can also benefit.
Specialized Facilities: This includes data centers, research facilities, and other specialized buildings that contain a mix of structural and personal property assets.
Factors to Consider
Age of the Property: Newly acquired, constructed, or renovated properties often yield the most benefits. However, even older properties can benefit from a "look-back" cost segregation study.
Cost of the Property: Generally, properties with a higher acquisition or construction cost will yield more significant tax savings through cost segregation.
Future Plans: If you're considering selling the property in the near future, it's essential to understand how cost segregation might impact the sale.
Conclusion
While many asset types can benefit from cost segregation, it's crucial to evaluate each property on a case-by-case basis. By understanding which assets are ideal for this strategy, property owners can maximize their tax savings and enhance their investment returns.
Interested in exploring if your assets are suitable for cost segregation? Contact our team of experts for a comprehensive assessment.
Note: Always consult with a cost segregation specialist or tax professional to determine the best approach for your specific assets and situation.