Utilize Bonus Depreciation for Your Properties!

The basis for cost segregation and the MACRS approach (The system utilized by the IRS for the purpose of depreciating eligible assets) is to identify real property from personal property. Tangible personal property, such as the structural components of buildings, allows you to capture the accelerated benefits of cost segregation. Real property consists of land, buildings or other inherently permanent structures.

Examples of Personal Property (contained in or attached to a structure/building)

• Interior Landscaping
• Neon or Other Signs
• Display Racks, Shelves or Cabinets
• Wall Coverings
• Window Treatments
• Certain Air-conditioning Equipment
• Decorative and Specific Business Activity Light Fixtures
• Carpeting
• Decorative Trim & Millwork
• Machinery, Generators & Kitchen Equipment
• Accordion Doors and Partitions

Examples of Real Property

• Land (non-depreciable)
• Buildings (27.5 or 39 year depreciation)
• Exterior Landscaping (15 year depreciation)
• Paved Parking Areas (15 year depreciation)
• Swimming Pools (15 year depreciation)
• Fences (15 year depreciation)
• Bridges (15 year depreciation)
• Side-walks (15 year depreciation)
• Docks (15 year depreciation)

After the tax reform, the structural value of a building is depreciated over 27.5 to 39 years and the tangible portion of a building is allowed to be expensed immediately in the year the assets were placed into service by the business. This is known as 100% bonus depreciation. Here’s a link to the IRS regulations around bonus depreciation.

Would an example be helpful?