Cost segregation is quite simply the identification of assets that meet IRS guidelines for accelerated depreciation in your dentist office. Most dentists’ offices have at least 35% of the interior build-out that qualifies for 5-year depreciation. Take a look at your depreciation schedule; what does it show…39.5 years? 31 years? 15 years?
What we do is simple, though the process of cost segregation is highly technical requiring architectural and engineering training. In fact, the IRS Chief Counsel actually said, “…cost segregation, for it to be properly applied, had to involve those with competencies in architecture, engineering or construction and/or construction techniques, in order for personal property assets to be accurately identified and segregated.”
So, how does cost segregation actually affect me and dentist office? Good question…did you pull your depreciation schedule to see how your assets are currently being depreciated? Please do! However, let’s be conservative and say that 30% of the cost of your build-out is all that qualifies for 5-year depreciation…and furthermore that you spent $150,000 to complete your dentist office. Well, 30% of $150,000 is $45,000 in depreciation. If you are in the maximum tax bracket, that means you have almost $12,000 in over-paid federal income taxes if you have been in your building or leasehold space for 5 years. You are due a $12,000 income tax refund!
It doesn’t matter if you have been there longer or for a shorter period of time, what matters is that you are due a refund; or tax credit if you choose. Either way, the IRS is holding your money when it should be in your pocket! Time-value of money…think about it…a dollar is always worth more today than it is tomorrow!
Cost segregation delivers results for dentists’ offices every time Segregation Holding Limited applies it!
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