Can a Business Deduct Part of Its Building for Tax Purposes?
The short answer is YES! Commercial buildings and their components are usually considered assets with a 39-year life for tax depreciation purposes. This means that the building is very slowly depreciated over a 39-year period. However, through the use of a Cost Segregation Study, a business can reclassify many of the components of its building as personal property with a tax life of 5, 7 or 15 years.
When is the deduction allowed?
Property classified as 5, 7 or 15 year property qualifies for bonus depreciation, which means that the tax deduction can be taken in the year that the building is either purchased, built, or renovated. Also, through the use of a Cost Segregation Study, a company can “look back” to a building placed in service in prior years and take bonus depreciation on the shorter lived components in the year of the study. No amended returns need to be filed.
Please join Susan Roberts and Mark Colvin as they discuss this and other tax benefits that a company can capitalize on through fixed asset studies in this video.
Allyson works for businesses of all sizes, maintaining a primary focus on business tax and consulting. She provides her clients with creative resolutions for technical tax issues and clearly interprets proposed and existing business tax law. Moreover, her thorough experience with trusts and estates allows her to deftly guide clients through the complicated legislation and the intricate processes involved in compliance, maximization of returns, and sustaining business and family wealth. She first gained knowledge and experience working for several years in a national firm, in a small firm environment, and in solo practice. She was also a partner in a regional legacy firm for 15 years prior to joining CLA. Her extensive tax experience bolsters CLA's talented staff and cultivates client relationships and makes her an invaluable member of the professional and civic communities.
I have a space (23000 sq ft) and would like to speak with Mark Colvin about potential cost segregation study.