An Overlooked Benefit of Cost Segregation!

[Julio Gonzalez]

Cost segregation studies have far more benefits than simply accelerated depreciation. One of those benefits is being able to accurately write off assets in the event of damage.

For example: You purchase a commercial building for $8,000,000. As part of the cost segregation study that you had performed on your property, it was determined that the value of the roof was $400,000.

A few years later, a storm comes through and damages your roof so badly that it needs to be replaced. The current adjusted tax basis of your roof is $370,000.

Since you had the cost segregation study performed and can easily identify and support the value of the roof, you are able to take a write off for the loss of the roof (i.e. loss of $370,000). Without the cost seg study, the asset would not have been segregated and it would’ve been much more difficult to determine the value of the roof as well as have the proper evidence to support that value.

Compare being able to write off the $370,000 today versus having to depreciate it over the life of the asset - 39 years - that’s quite a difference!

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