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Commercial RE - Cost Segregation / Accelerated Depreciation


emanon
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I was chatting with a CPA today who brought this up, specifically revolving around commercial real estate (including multi-unit residential). We didn't have time to really get into the details, but this is what I gathered:

 

You pay an engineering firm to do a building analysis and they break out everything into individual components. From that point, you apply accelerated depreciation to things who's useful lifespan obviously won't see the 39yr standard.

 

Any of you guys been through this? If so, how did it go? Anything to look out for? did you piss off the IRS and trigger an expensive audit?

 

I realize it's one of those, your results may vary and it depends on everything circumstances. Just looking for personal experiences.

 

For my circumstance, I don't plan to see the building/s anytime soon, but you never know. Everything is for sale for the right price.

 

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  • 1 month later...
I was chatting with a CPA today who brought this up, specifically revolving around commercial real estate (including multi-unit residential). We didn't have time to really get into the details, but this is what I gathered:

 

You pay an engineering firm to do a building analysis and they break out everything into individual components. From that point, you apply accelerated depreciation to things who's useful lifespan obviously won't see the 39yr standard.

 

Any of you guys been through this? If so, how did it go? Anything to look out for? did you piss off the IRS and trigger an expensive audit?

 

I realize it's one of those, your results may vary and it depends on everything circumstances. Just looking for personal experiences.

 

For my circumstance, I don't plan to see the building/s anytime soon, but you never know. Everything is for sale for the right price.

 

I use this on Industrial Real Estate and it works well. Basically, they break everything down like you said and give individual items their own depreciation schedule.

No problems at all and quite a few companies do this. Its pretty common. You can find companies that specialize in doing this and they will prepare a report for your accountant to use.

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Thanks baky! I've been looking into it and trying to sort out if it will offer me any benefit at this point, as I think I'm fairly close to the deductible limit excluding 179's.

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