Phoenix, AZ (PRWEB) September 7, 2005
Commercial property owners have always known that a dollar in their hand today is worth more than the promise of a dollar tomorrow. This maxim is the basis of the less than widely utilized Internal Revenue Service (IRS) approved tax strategy of cost segregation. Through cost segregation, commercial property owners are allowed by the IRS to reclassify real property to personal property leading to a dramatic reduction in taxable income and other benefits such as the ability to claim Âcatch upÂ depreciation on previously misclassified assets resulting in an immediate increase in cash flow. A typical commercial property owner can usually save several thousands of dollars over the life of their holdings by utilizing a cost segregation study.
ÂWhile the practice of cost segregation is not new, historically, due to the nature of the engineering-based process, usage was limited to the commercial property clients of the elite national accounting firms,Â stated Marky Moore, president, Capital Review Group, a national engineering-based firm specializing in cost segregation. For the past 10 years Capital Review Group, through its partners, has developed more than 3,000 cost segregation studies for commercial property clients who do not necessarily have representation of a national accounting firm.
Virtually any commercial property, with a capitalized building cost of $1,000,000 or more, constructed or acquired in a taxable transaction since 1987 qualifies. Building renovations and additions completed after 1987 may also qualify. Commercial property owners who pay federal income tax stand to benefit from this strategy.
An IRS qualified cost segregation study is a detailed engineering-based report that carves out property to be reclassified. Items which can be reclassified include, but are not limited to: light fixtures, branch wiring, potential plumbing, flooring, millwork, partition walls, cabinetry, furnishings, shelving, wall coverings, irrigation systems and site improvements.
ÂEven if you are presently depreciating certain property in an accelerated schedule you may still be leaving your money on the table,Â said Julio P. Gonzalez. Gonzalez is an expert on cost segregation and speaks nationally on the subject. ÂOnly if you have secured a cost segregation study performed by specialists (per the IRS), will all allowable property be depreciated on an accelerated basis.Â
To date, Capital Review Group has not received a single rejection from the IRS for any cost segregation study submitted. ÂEach and every study we submit is to the letter of the IRS Audit Technique Guide,Â added Moore. ÂWe have in excess of thirty-five trained, skilled professionals available to assist our clients. Not only do we provide engineering analysis Â we also provide the accounting reclassifications.Â
The benefits of a cost segregation study far outweigh the cost as typically 15% to 45% or more of a building's assets can be reclassified from a 39-year straight line depreciation schedule to a five or seven year accelerated period. Consider the following:
- Immediate increase in cash flow through accelerated depreciation deductions
- Reduction of income taxes and real estate property taxes
- Claim Âcatch upÂ depreciation on previously misclassified assets
- An independent third-party analysis that will withstand IRS review
This often over looked tax strategy can be a real winner for business owners.
Capital Review Group offers commercial property owners a Âtest driveÂ of this IRS friendly tax strategy through a no-risk, no-obligation preliminary review program. Commercial property owners interested in a Âtest driveÂ should contact Capital Review Group toll free at (877) 666-5539 or http://www.capitalreviewgroup.com.
Capital Review Group is based in Phoenix, Ariz. with associates located across the nation to provide local client support. Through specific and highly defined alliances, Capital Review Group provides the most contemporary methodologies (detailed engineering) for development of cost segregation studies of commercial property.
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