Recently Demolished or Renovated Your Building? You May Be Depreciating Non-Existent Retired Assets.
Open your books and exorcise the ghosts that may be haunting your bottom line! Too often, we find ‘ghost assets’ sitting on a taxpayer’s books that haven’t been retired or written-off. Under the tangible property repair regulations, taxpayers can identify building components that have been replaced during renovation or demolition and dispose of the remaining depreciable basis. These partial asset dispositions and retirements need to be made in the year of disposition otherwise they must remain on the books until they have run their course.
The IRS now requires property owners to depreciate 9 separate building systems within their building structure:
- Building Structure (including only walls, windows, doors, concrete & Roof)
- HVAC System(s)
- Plumbing System
- Electrical System
- Fire Suppression & Alarm
- Gas Distributions System
*and any other system identified in future published guidance
Benefits of a Detailed Cost Segregation Study:
The most detailed and precise method for determining disposition is via a detailed cost segregation study.
An engineering-based study breaks out the individual units of property to maximize disposition amounts while capturing added tax strategies to save money. For example, if an energy efficient lighting retrofit was done, there is opportunity for the 179D Energy Tax Deduction, disposition of the remaining basis of the old unit, as well as an increase in near term cash flow through accelerated depreciation.
Just think of Engineered Tax Services as your ghostbuster, ready to take on the challenge of clearing out those ‘ghost assets’ and other hidden tax strategies identified through our detailed Cost Segregation Study! ETS enables you to calculate the value of retired assets and provides all of the necessary documentation needed to claim additional tax deductions. Contact Engineered Tax Services today at 800-236-6519 for more information on disposition and cost segregation studies.