sponsored by BUSINESS TIP Businesses that have acquired, constructed or substantial- ly improved a building recently should consider a cost segregation study. One of these studies can enable the company to accelerate depreciation deductions, reduc- ing taxes and boosting cash flow. This article explains how. A sidebar points out that a “look-back” study can review many previous years of tax filings for missed deductions. Could a cost segregation study save your company taxes? If your business has acquired, constructed or substantially improved a building recently, consider a cost segregation study. One of these studies can enable you to identify building costs that are properly allocable to tangible personal property rather than real property. And this may allow you to accelerate depreciation deduc- tions, reducing taxes and boosting cash flow. Overlooked opportunities IRS rules generally allow you to depreciate commercial build- ings over 39 years (27½ years for residential properties). Often, busi- nesses will depreciate structural components (such as walls, win- dows, HVAC systems, elevators, plumbing and wiring) along with the building. Personal property – such as equipment, machinery, furniture and fixtures – is eligible for acceler- ated depreciation, usually over five or seven years. And land improve- ments – fences, outdoor lighting and parking lots, for example – are depreciable over 15 years. Too often, companies allocate all or most of a building’s acquisition or construction costs to real prop- erty, overlooking opportunities to allocate costs to shorter-lived per- sonal property or land improve- ments. Items that appear to be part of a building may in fact be per- sonal property. Examples include: • Removable wall and floor cov- erings • Detachable partitions • Awnings and canopies • Window treatments • Signage • Decorative lighting In addition, certain items that otherwise would be treated as real Can a cost segregation study benefit your company? Courtesy of CTDA 30 TileLetter | July 2017