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Cost Segregation Studies

Tax considerations are, of course, a big part of any real estate venture, investment or improvement. Here at Mueller Prost, we use a combination of technical and tax expertise to help you maximize your tax deductions – and keep that money in your business. One method in our arsenal is a Cost Segregation Study.

Cost Segregation (also called cost seg) allows you to reclassify assets from “real property” to those that might have shorter depreciation schedules, which carries federal and state income tax benefits. According to IRS rules, tax segregation studies must be performed by a team with engineering and accounting professionals.

We have the expertise you need in house to complete a cost segregation study. These are particularly useful if you have built, renovated, expanded or purchased real estate recently. While commercial real estate property is typically depreciated over 39 years, as much as 40% of the cost of that property may qualify for shorter depreciation schedules.

Mueller Prost can work with your team to identify those components and even indirect costs that qualify for 5, 7 or 15-year depreciation.

Timing a Cost Segregation Study

When is the best time for a cost segregation study?

For the maximum tax benefit, you should have a cost segregation study during the same tax year as your real estate expenditure, whether it’s for new construction, the purchase of an existing property or remodeling project. However, studies can be performed any time after a project is completed. Investors may also be able to use cost segregation as part of the planning phase of new construction.

Get in touch with Mueller Prost to determine the best timing of your cost segregation study.

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