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Cost Segregation is an IRS approved engineering based study that allows you to front load the depreciation on a business or investment property to increase the deductions and improve cash flow.

The Stimulus Package encouraged the practice by allowing you to catch up with the bonus depreciation from the time of your purchase and apply it all this year. It further enhanced the benefit by allowing you to spread it over the last five years of taxes paid if you cannot use it all this tax year. It immediately affects your quarterly estimates and several years of future taxes.

The savings impact is generally $70,000 to $100,000 per million dollars of property value. Taxes saved is cash flow. The impact is realized by the engineering study that breaks the components of your building into structural and personal property. The structural remains on the 27.5 or 39 year depreciation scheudule of your residential or commercial building but the personal property depreciation is accelerated into 5,7 and 15 year schedules. This usually affects 15% to 40% of your property value.

The shorter depreciation is what gives the increased cash flow over straight line and creates your savings. The value in using Cost Segregation in purchasing a property is to increase the returns and the loan amount.

The studies can be used several times in a property’s life. It can be used each time a property changes hands, when it is renovated, inherited, or willed in the death of a spouse. A property could be reevaluated for a couple that owns a property, than after one dies, and then after the second spouse dies and wills it to the children.

If Cost Segregation is applied to a property and then it is sold in a 1031 exchange, the benefits are deferred to the next property so that capital gains are not paid on the bonus depreciation received. It is turning ordinary income into capital gains and then the exchange defers the gains.

You can get a free estimate of savings on any property and a proposal of the cost to finish the study. The study costs just a fraction of first years savings and the study creates a bonus for 15 years. The completed study is given to your CPA who incorporates the results into your tax returns.

For more information visit http://www.MeetMarkKaplan.com

To learn more about creating extra cash flow from your investment or business property visit http://www.meetmarkkaplan.com You may also sign up to receive free brochures or even free estimates of savings on your property(s).