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TL;DR Summary: Only a cost segregation study can unlock the value of your commercial property for a large tax deduction.

Real estate has long been held as a way to build wealth and there are many examples out there (good and bad) of those who have made their fortunes in real estate. While real estate may hold great value, many real estate purchases end up feeling more like the Money Pit when investors discover all the money they invested in their commercial real estate is not tax deductible in the year paid.

Cost segregation studies (“CSS” or “Cost Seg Studies”, combined with the new favorable bonus depreciation rules can make a new real estate investment cash flow positive and a tax deduction. If your accountant has ever had the “basis” discussion with you, please keep reading. If not, get ahead of that “I don’t make the rules” conversation and keep reading.

Cost segregations studies became accessible to the general public after the Hospital Corporation of America vs. Commissioner 1999 tax court case that upheld a company’s use of a cost segregation report to accelerate depreciation expenses.

The CSS report consists of an engineer’s analysis that itemizes all of the materials that went into building your property and breaks down the items into specific categories for tax purposes. The end result is a report that provides the documentation for accountants (like GP CPA) to legally accelerate depreciation expenses and move assets out of the dreaded 39 year category. This scenario makes for happy real estate investors and lowered income tax bills.

As an example, a client of ours recently commissioned a firm [for about $4,000] to perform a cost segregation study of their recent commercial real estate purchase and were able to move about 34% of the cost of the building and into faster depreciation categories. The results of their CSS report were $80,000 in depreciation accelerated and over $20,000 in tax savings over the next few years. For real estate valued at $300,000 or more, a cost segregation analysis can make a substantial difference in the real estate investor’s tax return.

Please contact us to discuss the details of how a cost segregation study could improve your bottom line.

Navigating the Unexpected Closure of Bench: GP CPA, P.C. Is Here to Help

Navigating the Unexpected Closure of Bench: GP CPA, P.C. Is Here to Help

In contrast to Bench, (RIP?), GP CPA, P.C. is a Certified Public Accounting firm located in the Southeastern United States. We are second generation CPAs and business advisors. We can take over for wherever it is that Bench left off and with us, you won’t experience a data hostage situation with our firm.

I received funds from the Restaurant Revitalization Fund (RRF) program, now what do I do with the money?

I received funds from the Restaurant Revitalization Fund (RRF) program, now what do I do with the money?

First off, the funds are expected to be spent before the end of 2021, as an annual report to the SBA will be required at some point in the future. We are still waiting for guidance from the SBA regarding what this annual report will look like. It may make sense to draft a spending plan or budget to make sure all of the funds are spent on time and in accordance with the program rules. GP CPA can help you with this planning, so you can prevent a surprise surplus of funds. Spend wisely and timely!

The Employee Retention Credit (ERC)

The Employee Retention Credit (ERC)

The Employee Retention Credit (“ERC”) has had some upgrades and retrofits to some of the basic calculations with the most recent (12.27.20) CARES Act changes.

I received funds from the Restaurant Revitalization Fund (RRF) program, now what do I do with the money?

I received funds from the Restaurant Revitalization Fund (RRF) program, now what do I do with the money?

First off, the funds are expected to be spent before the end of 2021, as an annual report to the SBA will be required at some point in the future. We are still waiting for guidance from the SBA regarding what this annual report will look like. It may make sense to draft a spending plan or budget to make sure all of the funds are spent on time and in accordance with the program rules. GP CPA can help you with this planning, so you can prevent a surprise surplus of funds. Spend wisely and timely!

What Tax Breaks Changed From 2018?

What Tax Breaks Changed From 2018?

Congress extended some of the tax breaks retroactively to January 1, 2018. They now expire on December 31, 2020. Learn more about tax breaks that have been extended.

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