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| Real Estate Investors Limit Risk with Cost Segregation Real estate investors can cut their tax rate by over half and defer paying the income taxes as a result of cost segregation. Some real estate investors ask if cost segregation is risky. While a high level of skepticism is appropriate when considering issues related to federal income taxes, a detailed review of the income tax code and IRS documentation will show cost segregation to be both legitimate and effective. Many real estate investors may be familiar with component depreciation. Component depreciation was used until the early 1980's to sharply increase the level of real estate depreciation. There were some concerns of abuse by the IRS. In the early 1980's, the option of using component depreciation was eliminated but much more generous depreciation schedules were substituted. These generous depreciation schedules were eliminated in 1986. While the methodology of cost segregation is different from that for component depreciation, the end result is similar - a higher level of depreciation for real estate investors. The IRS codified rules for cost segregation in its Audit Techniques Guide (ATG), to provide both its officers and practitioners with clear guidelines. Risk of an audit is minimized when cost segregation is prepared by a trained and experienced appraiser or engineer that conforms to the Audit Techniques Guide. In fact, a high quality cost segregation report is the best documentation to support a depreciation schedule. The IRS recommends that commercial property owners who break out short life property obtain a cost segregation study from an independent third party. » Get a complimentary estimate of tax savings on your property » Now offering RSS Feeds to keep you updated on the latest commercial real estate trends!  Please send me periodic real estate information. O'Connor & Associates -- Your Key to Real Estate Value Corporate Office: 2200 North Loop W., Suite 200 Houston, TX 77018 1-800-856-7325 Dallas * Houston * Los Angeles * Newport Beach If you would like to be removed from this list and receive no future real estate information, click here to unsubscribe. |
 Cost Segregation Benefits
About O'Connor & Associates O'Connor & Associates is a real estate consulting services firm, conducting business nationwide. Our professional staff in Houston, Dallas, Los Angeles and Newport Beach is available to help you with your tax, business and real estate valuation matters, including cost segregation studies, commercial real estate appraisals, commercial property tax reduction and litigation support. Hire O'Connor & Associates to save thousands through federal and ad valorem tax reduction. Visit us at www.poconnor.com. |
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