Cost Segregation

If you have recently purchased a facility or funded building improvements, you should consider the financial advantages of cost segregation. Cost segregation is the process of identifying Personal Property assets that inadvertently have been classified as real property.

Over the years, we have found that misclassification can occur following construction, when all project-related costs are recorded on the balance sheet as real property. The mistake can be costly when it comes to calculating depreciation.

Most property owners depreciate real property over 39 years. This is entirely appropriate treatment for the building structure. But it delays unnecessarily the depreciation of shorter-lived building components. American Appraisal cost segregation studies identify building component assets that qualify for accelerated depreciation.

Cost segregation does not eliminate taxes. It does increase your cash flow and produce a lower cost of capital in the first few years following acquisition or improvement of an existing facility.

We have been conducting cost segregation studies for more than 50 years. American Appraisal has the global expertise in construction, cost estimating and relevant tax regulations to undertake studies ranging from a hometown investment in a single building to a multinational corporation’s facilities on several continents.

We invite you to talk with us about the merits of cost segregation.