Cost Segregation Case Study
The professionals at CJG Partners LLP provide the expertise to implementing tax deferral strategies related to commercial property purchases. Our knowledge of the tax code coupled with the compliance requirements of cost segregation studies offers an affordable option to using traditional consultants.
Challenge
A family-owned business in Northwest Illinois expanded its manufacturing facility with a cost of $3,500,000.
This facility expansion qualified for cost segregation, a method of reclassifying building assets that accelerates depreciation and provides a tax benefit to the owners of commercial property.
Solution
We were able to reclassify various components of the facility expansion.
- The results of the cost segregation study reclassified $1.3 million of the original construction costs from real property to personal property.
- The depreciable life of real property is 39 years, while personal property is depreciated over five, seven or 15 years.
Results
- The family-owned business was able to claim $685,000 in additional depreciation that would not have been possible without a cost segregation study.
- Beyond the immediate acceleration of depreciation, the cost segregation study provided additional accelerated depreciation of $220,000 the following two years.
Categories: Startegic Planning