What is cost-segragation analysis ?

Question

We are setting up a new dental office.
We have heard that cost for certain (spcific dental) work put in the building can be used in some way for tax advantage. But we have to submit / keep "cost segragation analysys".

Answer 1

Cost segregation is a tax strategy that has been around for a long time, but not commonly used or understood. A cost segregation analysis reviews the costs incurred to acquire, construct or improve business real estate such as office buildings, apartment housing, manufacturing plants, etc. The reason for an analysis is to identify assets for the project owner that have shorter tax lives. Without a cost segregation analysis, tax law requires the owner of a commercial facility to use 27.5 to 39 year tax lives instead of lives that are as much as six times shorter. The reason the tax lives are important is because they form the basis for depreciation deductions.

Answer 2

A cost segregation study help to identify items that can be properly classified as tangible land improvements and personal property rather than real property which is depreciated over 39 years. The resultant tax benefits begin in the quarter the study is complete and continue throughout the devaluation life of the identified assets.

Answer 3

If you're serious about this you can contact:

Richard Morrisey
Cost Segregation Specialist
Quantum Engineering Associates, Inc.
Structural Engineering and Cost Segregation
[phone]

We have an affiliation with this company who specializes in these studies.