Does Cost Segregation Make Sense for You?
It is wise to ask if cost segregation is for you. Otherwise, you may have a nice report, but no savings. The relevant cases are easy to summarize:
- Cost segregation makes sense if you have substantial ordinary income which can not otherwise be offset. The other issue is to confirm you can deduct the depreciation. Limited partners are only able to deduct losses to the extent they have passive income.
- However, if you qualify, cost segregation is very powerful and cost efficient. Tax savings of 10:1 to 100:1 are not unusual. The cost is a flat fee, often miniscule relative to the savings. The larger the property the better the results.
- Obtain a preliminary analysis that reflects numerous data points on your property. The accuracy of preliminary analysis is excellent, and they are free.
- Compare the income tax savings with the fee and determine if it makes sense for you. You can also compare the payback ratio with the site-visit or without it.
Feel free to contact our experienced consultants.
In summary, if you have substantial taxable income, cost segregation is an except method to defer or eliminate the taxable income by increasing depreciation.