Many commercial property owners pay more in taxes than they need to. Usually they haven’t done anything wrong. Their building is just being depreciated the slow way. In this podcast appearance, Tom Brodie, National Account Executive with CSSI – Cost Segregation Services, talks about where those hidden savings usually sit and how owners can claim them.
Where the Hidden Savings Are
By default, the IRS has you depreciate a commercial building over 39 years (27.5 years for residential rentals). But a building isn’t one single asset. Many of its parts, like certain electrical, flooring, lighting, cabinetry, parking areas and landscaping, can qualify for much shorter 5, 7 or 15-year schedules.
A cost segregation study is an engineering-based analysis that finds those components and reclassifies them. The result is bigger deductions now, lower taxable income and more cash flow for your business or your next investment.
Who Should Take a Closer Look
If you’ve bought, built, expanded or renovated a property worth $200,000 or more in the last 15 years, there’s a good chance you’re leaving money on the table. That includes:
- Commercial property owners and real estate investors
- Medical, dental and professional offices
- Multifamily and residential rental portfolios
- Retail centers, warehouses and industrial facilities
- Restaurants, hospitality and franchise businesses
- Self-storage facilities
It’s Not Too Late for Past Purchases
Bought your property a few years ago? A study can still be applied, and missed depreciation can be caught up in the current tax year without amending prior-year returns. The study fee itself is also tax-deductible.
What It Looks Like in Real Numbers
One example: a retail strip center purchased in January 2020 for $5,555,041 (less land) produced a first-year tax savings benefit of $778,289. Results vary by property, which is why every study starts with a free estimate.
See What Your Building Could Save
Tom will run a free, no-obligation estimate on your property, so you’ll know what’s possible before you commit to anything.
Prefer to talk now? Call Tom at 713-906-3710.
I’m a two time Texas A&M graduate (BBA: 1981 & MBA: 2001) who worked for Shell Oil Company for 26 years. I learned the importance of communications – both verbal and written, as well as problem solving skills. With experience ranging from finding intra-company billing errors to defining customer requirements in global budgeting software to teaching people how to scuba dive and take pictures underwater. Tom Brodie Bio
