Cost Segregation of Medical office
Cost segregation is a tax planning tool that accelerates the rate of depreciation of components of property to thereby lower the amount of taxable income. An asset’s value depreciates with time, due to usual usage and the effect that has on a property. Depreciation takes this loss of value due to wear and tear into consideration to lower the value of a property over time, which for residential property is 27.5 years while commercial property’s period is 39 years. Once the value of the property has gone down, the owner can write off more of it, which will lower the taxes owed.
While this depreciation for tax savings can only be applied to properties that are not the owner’s primary residence, such as a second house, retail space, or a commercial unit, there is no doubt that taking the depreciation value will help when looking at the value of something and the tax that will be levied against it. Most real estate tracks the value of the whole commercial property through the depreciation period, however, to maximize the benefit of depreciation, cost segregation can be key. Rather than waiting out the full specified depreciation period, cost segregation allows for an acceleration of the depreciation rate of an asset. To do this, the owner of the property must have a cost segregation study or analysis completed for that property to initialize the process.
