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Cost Segregation for Renovations

Reduce Income Tax, Property Tax and Property Insurance

Prior to starting renovations of recently acquired or existing properties, buyers or owners must first allocate the purchase price or segregate the construction cost between tangible assets, such as non-depreciable land and depreciable assets such as buildings, land improvements, and tenant improvements for occupied and vacant spaces.

The allocation must be based upon the appraised Fair Value or Market Value In Use of all the assets acquired, balanced to the final purchase price. Renovation costs of existing properties must be segregated and balanced to the final capitalized construction cost.

This establishes the baseline tax basis for portions of the property that may be disposed of and/or replaced as part of the renovation process. While further breakdowns are often required to match specifics of the demolition plan, strong tax audit documentation support is thereby created.

Renovation generally involves removal of existing building components such as ceilings, floor finishes, light fixtures, ductwork, walls, wiring, plumbing, etc. The remaining tax basis can be written off if the acquisition is properly valued and allocated to removed components.

Sage Fixed Assets ROI Calculator

Not only can Sage Fixed Assets make your fixed asset management process more efficient, but it may help you save money, as well. We invite you to see first-hand how Sage Fixed Assets solutions pay for themselves.

Cost Segregation Tax Savings Calculator

The ultimate return on any investment is the net cash flow realized after all expenses have been paid, including Federal and State income taxes. We invite you to see first-hand how much you could save with a Cost Segregation study.