Discover a powerful tax strategy to enhance your cash flow. At Tributan, we specialize in helping businesses accelerate depreciation deductions through cost segregation, deferring income taxes and unlocking significant savings on your real estate investments.
What Is Cost Segregation?
Cost segregation is a proven tax planning approach that allows property owners who’ve built, bought, expanded, or renovated real estate to boost cash flow. It achieves this by speeding up depreciation deductions and postponing federal and state income taxes, reclassifying components for shorter recovery periods.
What Are the Benefits of Cost Segregation?
Implementing cost segregation delivers multiple advantages for your business and investments:
- Immediate Cash Flow Boost: Accelerate depreciation to generate quick tax savings, freeing up funds for growth or operations.
- Asset Write-Offs: Identify major building elements and improvements for deductions when they’re replaced or upgraded.
- Audit-Ready Documentation: Benefit from an independent, thorough analysis designed to hold up under IRS scrutiny.
- Long-Term Tax Deferral: Shift more costs to faster depreciation classes, reducing current tax liabilities over time.
How Does Cost Segregation Work?
A cost segregation study breaks down your property’s construction or acquisition costs—typically depreciated over 27.5 or 39 years—and reallocates portions to 5-, 7-, or 15-year lives. On average, 20-40% of components qualify for these shorter periods. This includes separating structural items like roofs, HVAC, and windows for potential loss claims on replacements, as well as handling leasehold improvements. For instance, specialized electrical systems for equipment can depreciate over just 5 years, maximizing early deductions.
What’s Involved in a Cost Segregation Study?
Our expert-led process reviews records, blueprints, and conducts on-site inspections to accurately classify assets. If details are missing, we use engineering estimates. We start with a no-cost preliminary review to estimate your potential savings, ensuring a tailored, compliant report.
When Should You Conduct a Cost Segregation Study?
It’s ideal right after purchasing, remodeling, or constructing a property, but you can apply it anytime—even retrospectively. For investors, the best time is during planning to optimize setups before finalizing infrastructure.
Our Streamlined 3-Step Process
Building on our efficient R&D credit approach, here’s how we deliver cost segregation results:
- Kick-Off Consultation: A brief 30-minute call to evaluate your property and potential eligibility.
- Detailed Analysis: Our team assesses costs, reclassifies components, and calculates projected tax benefits.
- Comprehensive Report: Get a clear, documented summary with all the insights needed to claim your deductions confidently.