Cost Segregation Strategies Available
Many days business owners are hit with another expense, another tax, another repair – another anything that makes it harder to pay the bills and make a profit. Conversely, there are few days business owners discover a way to make cash flow better.
Eureka! This is one of those selected good days. There is a way to accelerate tax deductions on your dealership facilities, which can aid cash flow.
We can help dealers use cost segregation strategies on newly constructed and acquired facilities and on facilities upgrades that enable speeding up the ability to take advantage of depreciation opportunities. The increased expense deduction for depreciation reduces a dealer’s tax bill, which in turn increases the dealership’s cash flow. The bottom line is this: cost segregation studies have enabled some dealers to significantly reduce their tax bill and reduce their mortgage.
Think of it this way. The IRS says that in the absence of a cost segregation study, the depreciable life of your facility is 39 years, yet most commercial loans are written based upon a 20-year amortization. In essence you are paying for the building twice as fast as you are taking the tax deductions. This results in a significant drain on cash.
Did you build, acquire or expand your facility a few years ago? Don’t worry; you have not missed the opportunity to take advantage of a cost segregation study. The IRS regulations permit a taxpayer to perform the study and take a tax deduction all in the current year to catch up the depreciation expense that should have been taken.