How a cost seg study helps if an asset gets damaged!

[Julio Gonzalez]

You may hear cost segregation and think faster depreciation, but did you know that there are also benefits to having a cost segregation study done if an asset gets damaged?

Let me explain.

Let’s say you bought a building for $10,000,000. You did a cost seg study and the roof was valued at $500k.

Later, when the roof has an adjusted tax basis of $480,000, it gets damaged and needs replaced.

In this case, if you did a cost seg study, you would have the details necessary to identify the value of the roof in order to take a write for (i.e. a $480,000 loss.)

If you didn’t do a cost seg study, you would not have the $480,000 segregated from the rest of the building in order to easily write off the roof.

Compare a write off today to depreciating the asset over, say, 39 years - that’s a big difference!

If anyone has questions about this, please feel free to know my inbox or comments section is always open!

I’m here to share as much information as possible.