Cost Segregation and Commercial Real Estate (CRE)
Whether developing a new property or acquiring an older asset for your portfolio, a Cost Segregation Study is worth exploring for commercial properties valued greater than $750,000. The standard depreciation schedule for CRE is 39 years. By leveraging cost segregation an owner is able to reclassify all of the components of a CRE asset based on their useful depreciation schedule, with components classified into 5, 7, 15 and 39 year property. By utilizing an accelerated depreciation schedule, an owner is able to take 1½ to 3 times more depreciation annually over the first 8 to 10 years of owning a property, maximizing the owner’s cash flow.
If sold, this accelerated depreciation does have to be ‘recaptured’, and the expense for a Cost Segregation study often runs tens of thousands of dollars, so this tactic is not to be taken lightly. However, if used in coordination with other CRE strategies, Cost Segregation can be a very powerful tool.
Fort Collins, CO 80525
T 970.776.3900 | D 970.267.7722
F 970.267.7419 | C 970.231.7513
Jason.Ells@CassidyTurley.com
www.cassidyturley.com
Whether developing a new property or acquiring an older asset for your portfolio, a Cost Segregation Study is worth exploring for commercial properties valued greater than $750,000. The standard depreciation schedule for CRE is 39 years. By leveraging cost segregation an owner is able to reclassify all of the components of a CRE asset based on their useful depreciation schedule, with components classified into 5, 7, 15 and 39 year property. By utilizing an accelerated depreciation schedule, an owner is able to take 1½ to 3 times more depreciation annually over the first 8 to 10 years of owning a…
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