Cost segregation is a tax strategy that offers commercial real property owners the ability to reduce their tax burden and free up capital.
Under Internal Revenue Code (IRC) Sections 1245 and 1250, personal property and certain land improvements may be depreciated over significantly less time than nonresidential real property. These shorter-lived assets are also eligible for accelerated depreciation. Thus, for integrated capital construction projects and newly acquired building complexes, an accurate assignment of costs allows a company to “front load” cost recovery and cash flow, optimizing them in the years immediately following construction or purchase.
VRC professionals develop comprehensive property listings and segregate costs among buildings and structural components, personal property, and land improvements in accordance with IRC §1245 and §1250 and related tax regulations. Our conclusions are fully documented in reports compiled with IRS review in mind.