Building Depreciation
What is Depreciation on a Building?
Depreciation is the value lost on assets over time.
Depreciation is the value lost on assets over time. US tax law allows taxpayers to choose from several depreciation methods to set up asset schedules. It is up to the tax professional to determine which depreciation methods are right for the taxpayer. Typically, commercial and residential rental buildings depreciate on a straight-line 27.5- or 39-year schedule. However, this is only one way to depreciate a building, and there are alternative methods, including cost segregation.
Segregated Depreciation
The cost segregation method of depreciation is recommended by The AICPA, Journal of Accountancy, and outlined in detail in US tax code. At CSSI® – Cost Segregation Services, LLC, our team of professionals identify components in a building and reclassify them into shorter class lives outlined by US tax code. This reclassification of real to personal property allows components to be depreciated on a 5-, 7-, or 15-year schedule rather than the standard 27.5 or 39 years. This reduces taxable income and increases cash flow.
CSSI® uses an engineering-based cost segregation method to analyze and accelerate depreciation on parts of your buildings. The CSSI® process includes:
- Obtaining simple information from you about your building
- Providing a complimentary property analysis
- Reviewing potential tax savings with you and your tax professional
- Engaging and completing your cost study in a 4-6 week timeframe
By utilizing an engineering-based cost segregation study, you are reducing your personal taxable income, thus reducing the amount of income taxes paid.
The following are excellent contenders for cost segregation studies:
- New buildings
- Improvements and expansions
- Tennant improvements
- Previously purchased properties
- Stepped-up basis at death or partnership transactions
Contact CSSI® and Increase your Cash Flow
We are focused on getting you the extra money you need to grow your business. Since 2003, we have completed over 45,000 engineering-based studies for commercial property owners. We have representatives in all 50 states who are ready to pay personal and professional attention to you and your business.