Savings from Cost Segregation studies can be relatively substantial for properties or improvements placed in service within the last 15-20 years. A study completed on a property previously placed in service does not require amended returns. You can simply file a form 3115 (change in accounting method) with your 2007 return and we can complete those forms for you! The increased accumulated depreciation from the study is taken as a deduction on the 2007 return. As of 2002, the IRS automatically approves the 3115 so there is no need to pay the $2,500 filing fee. Following are some examples of recently completed cost segregation studies on properties placed in service in prior years: Building TypeCapitalized CostIncrease in Cash Flow (Years 1-5)481(a) AdjustmentProject Specs/Year PIS5-Yr7-Yr15-YrManufacturing Facility$5,988,393.00$209,097.68$613,481.94New Construction 1988-20060.38%10.88%1.40%Shopping Center$3,013,177.43$96,010.00$313,024.00Acquired 19927.00%0.16%13.32%Self Storage Facility$3,415,973.00$86,263.00$238,678.00New Construction 19975.94%0.02%5.94%Shopping Center$2,911,815.00$140,554.00$414,971.00Acquisition and New Improvements - 199813.95%0.26%7.53%Light Manufacturing Plant$4,962,753.30$355,074.33$1,001,104.20New Construction 1998-19994.95%18.06%7.71%Hockey Training Facility$7,180,359.00$242,684.60$672,510.30New Construction 19980.08%12.90%6.31% Back BAy Accounting and Tax can help you maximize the Cost segregation benefits for substanial tax benefits in 2007. Year end 2007 is almost here so give us a call! Jerry Mansfield, Back Bay Accounting and Tax, LLC 617-578-0800
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