Cost segregation and depreciation recapture

[Stanley Odum]

If IRC Section 1245 Tangible Personal Property (shorter life assets) acquired incidental to Section 1250 Real Property (longer life assets) are not replaced/retired during the recommended 3 to 5 year holding period after applying the results of a cost segregation study, a diminished value can be assigned to the shorter life assets which are taxed at the personal income tax rate of up to 37% upon sale as these assets will be partially or fully depreciated and more gain can be assigned to longer life assets taxed at the more favorable Real Property tax rate (up to 25%). This minimizes the impact (amount) of depreciation recapture upon sale.

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Disclaimer: This is not tax advice.