Study Details – Medical Facility Purchase: Engineered Tax Services performed a cost segregation engineering review of building components on a one-story, 15,838 square foot medical office building. The cost segregation benefit included a reclassification of 27.5-year depreciation class life assets into 5 and 15 year class lives, resulting in a combined benefit of $1,622,280 on the
Real Estate Asset Disposition Studies
Are You Still Depreciating Non-Existent Assets?
When you undertake demolition or renovate a building to tear out lighting, HVAC units, and other components, they are abandoned or retired from the building. As such, their book value can be treated as a business deduction. The tangible personal property within the structure (or a part of it) allows for the remaining depreciable value (or basis) to be written off when the asset is retired, provided the personal property is no longer in service and was not purchased with the intent to demolish. This must be identified and valued prior to demolition.
Important: Consider these tax strategies before any demolition and/or renovation is completed or you may lose this opportunity.
When you re-light a building, you create both an opportunity for the Energy Tax Deductions and a real estate asset disposition study. Excess lighting (eliminated with the new energy-efficient system) can be depreciated faster than the typical 39 years; therefore, you maximize your tax strategies and save money.
Why Can You Take Real Estate Asset Disposition?
Recent changes to tax regulations allows for the disposition of individual building components, while previously the IRS viewed a building as a single unit of property (UOP). The new regulations as issued in IRS Code 1.168(i)-8 allows a property owner to dispose of a smaller UOP provided that a detailed cost segregation report has properly broken down individualized UOP within the larger unit. The IRS now required property owners to depreciate 9 separate units of property within their real property:
- 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)
What Can Be Disposed of?
250,000 square foot Warehouse – Lighting Retrofit
To learn more about our real estate asset disposition studies, please complete the form below
or contact Engineered Tax Services at (800) 236-6519.
To learn more about disposition studies, contact us at 561-253-6640 or email us here.
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The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. Presentation of the information via the internet is not intended to create, and receipt does not constitute, a tax planner-client or financial-planner-client relationship. Internet subscribers, users, and online readers are advised not to act upon this information without seeking the service of a professional tax and/or financial planner.
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Study Details – Hotel Purchase & Improvements: Engineered Tax Services performed a cost segregation engineering review of building components and site improvements on a 3-story 50,000 sq. ft. hotel in Florida. The cost segregation benefit included a reclassification of 39-year depreciation class life assets into 5 and 15 year class lives, resulting in a combined
By applying cost segregation, property owners accelerate depreciation, reduce tax liability and increase their bottom line. This aids in future benefits via abandonment, repairs, routine maintenance and overall asset management. ETS performs hundreds of cost segregation studies on a monthly basis for property owners, providing a detailed engineering review of assets including special purpose mechanical