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Rate of Return for Cost Segregation Study in Year One

Cost segregation offers a bevy of benefits to a commercial property owner that has income that cannot be shielded with other methods. Though it may not work for every business, when it does, cost segregation can have immediate results. One of the main advantages is that if can have an almost immediate impact on your bottom line in several ways.

This payback on your investment can range from 10 times what you spent on the cost segregation study, to 100 times your investment in only a year. This depends on many factors, however:

The amount of taxable income available to offset after the conclusion of the study.
What your marginal tax rate is.
If you are able to utilize bonus depreciation in a timely manner.

Bonus depreciation is the secret weapon for many cost segregation cases, as it acts as an enhancer to savings under the correct circumstances. While still effective, bonus depreciation is currently in a sunsetting period, diminishing every year:

40% in 2025        20% in 2026

While it may not be the massive boost it was a few years ago, bonus depreciation still has some life in it, but the window is closing. There have been attempts to bring it back to full power, and the current administration is keen to see it restored to some portion of its former glory. Until then, there is only a limited time to add this to your cost segregation victory