Cost Segregation Service in Washington DC
Cost segregation is a tax strategy that focuses on distinguishing personal property components from real property assets for tax filing purposes. It's a method sanctioned by the IRS that enables property owners in Washington DC to speed up their depreciation deductions, which can lead to an increase in cash flow and a decrease in tax liabilities for those involved in purchasing, constructing or renovating properties.
It provides an advantage for real estate investors in Washington DC by allowing them to claim the depreciation of their property more promptly against their taxable income. This is advantageous for all kinds of residential and commercial property investments.
A cost segregation study precisely itemizes the construction-related costs in Washington DC into segments that can be depreciated over shorter durations, like five, seven or 15 years, rather than the typical 27.5 or 39 years. The goal is to identify every possible cost associated with the property that qualifies for accelerated depreciation.
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Frequently Asked Questions
When to Engage Cost Segregation Professionals in Washington DC
Because cost segregation sets a baseline for the original purchase, it’s easier for us and the IRS to set that baseline by performing the study before a rehab, with an engineer documenting the reclassification, before the improvements are made. It’s harder to document your rehab costs after you’ve renovated.
After the rehab, you’ll have receipts and invoices that tell us the exact cost of the new items. With your cost seg report pre-rehab and receipts/invoices to justify the cost of anything new and details on what was replaced in each facility in Washington DC, you’ll have everything you need to apply bonus depreciation/partial disposition elections/repair rules. If you go ahead with the improvements, you can revert back to the original cost seg studies and calculate your partial asset disposition.
Are Cost Segregation Studies Worth It?
Definitely! The 2017 Tax Cuts and Jobs Act allows for an immediate deduction for the full costs in the first year. If you own a property in Washington DC with a class life of 27 years, you might be eligible for a sizeable bonus depreciation in year one by reallocating some of your building’s assets to a five- or 15-year lifespan.
What Is the Best Time of the Year to Do a Cost Segregation Study?
Anytime—as long as you commission your cost segregation study before a construction rehab. Because cost segregation sets a baseline for the original purchase, it’s easier for a cost segregation company in Washington DC and the IRS to set that baseline by performing the study before the rehab, with an engineer documenting the reclassification, before the improvements are made. It’s harder to document your rehab costs after you’ve renovated.
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Washington DC
(800) 236-6519
Get Your Questions Answered about Cost Segregation!
Our Cost Segregation Specialists are happy to answer your questions about this federal income tax tool.
Webinars:
Possibilities: How to navigate economic uncertainty as a real estate investor
Webinar covering Cost Segregation, Bonus Depreciation, energy-efficient tax credits and more.
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Case Studies
Cost Segregation Study For Hardware Store In Clinton, Iowa
Cost Segregation Study For $900,000 Office Building In Kalamazoo, MI
Cost Segregation Study For $2.5 Million Retail Pharmacy In Joliet, Illinois
Articles
Understanding Tax Deductions: 179D, 179 and Bonus Depreciation
How to Claim Deductions on Related-Party Property
