Are cost segregation studies now required
by the IRS?
263(a), although an obscure number, has significantly
changed the investment real estate capital
improvement guideline landscape.
This section falls under the Uniform Capitalization
rules of the Internal revenue code.
It outlines the new mandates and requirements
for expenses and capital expenditures.
The new guidelines provide tax benefits to
commercial property owners through favorable
rulings on building improvement and repairs,
as long as the following criteria are met:
Building structures such as HVAC systems,
plumbing systems, heating ventilation, electrical
systems, and other structural systems must
have identified values before they are allowed
to be expensed upon replacement or capitalized.
Unless property owners have the exact value
of the building structures or systems, a cost
segregation study would be necessary for a
property owner to remain compliant with the
new guidelines.
Cost Segregation studies help to define the
units of property for the owner. In addition
to this, the study can correctly identify
"disposed of building components". Without
the cost segregation study, the disposed of
building components can't be correctly identified,
which can lead to significant missed deduction
opportunities.
To make sure you are compliant with the new
changes in law and are maximizing your deduction
capabilities.
Call your CSS representative for a free estimate
of savings and consultative session.
