Per U.S. tax code, buildings (real property assets) are classified for 39-year depreciation. What many building owners don’t realize is that some assets, presumed to be part of a building’s structural elements, may be reclassified as non-integral personal property assets (a practice known as cost segregation).
The important takeaway of reclassification is that you can separate and accelerate those items for depreciation on a much shorter schedule, providing immediate tax savings and increased cash flow.
5 Things Worth Consideration:
- 1 Separating out personal assets for federal tax purposes can result in substantial cost-savings with direct bearing on total cost of ownership
- 2 Land/facility improvements, certain building equipment, finishes, task lighting, portions of the electrical package, and elements not structurally affixed or connected to building operations warrant re-evaluation