Apartment owners can face staggering expenses to maintain apartment communities. The upkeep of even a modest community could involve groundskeeping, unit renovation, and replacements, such as parking lot asphalt and fencing. Another steep expense is federal income tax – and in some areas an additional state tax on income – but through an innovative study known as cost segregation, the depreciation of property components can be used to help lower federal taxes.
Cost Segregation : Why are 90% of real estate investors overpaying federal income tax?
How business owners can save $50,000 to $100,000 during the first year of appealing their federal income tax.
Depreciate property improvements correctly with cost segregation
A cost segregation study allows property owners to both defer and reduce federal income taxes. When properly performed by an appraiser with expertise in cost segregation, this is a conservative tax planning tool which reduces federal income taxes by properly allocating the cost basis between land, 5-year, 7-year, 15-year, 27.5-year and 39-year property.
Summary Regulatory History of Cost Segregation
Compiled by OConnor & Associates from Internal Revenue Service Cost Segregation Audit Techniques Guide, January 30, 2006
Cost Segregation – Why isn’t my CPA already doing this?
Most commercial property owners, even those who use professional accountants, fail to take advantage of cost segregation, a tax mechanism that could generate substantial savings in federal income taxes.
Appraisers lower costs for federal tax savings on small property depreciation
Tax savings through cost segregation is no longer out of reach for investors in small and medium size properties. With appraiser expertise, fees for analysis are often one-third to one-half lower than those charged by traditional preparers.