Financial institutions such as banks and other properties associated with banks make up a good portion of commercial property in the US. Any commercial property that has been constructed, renovated or bought can potentially benefit from cost segregation which reallocates parts of the property to depreciate faster over a shorter period of time.
Setting up a cost segregation study can be an incredibly beneficial tax tool that can save your institution thousands of dollars in tax deductions. These studies take the depreciation time of a commercial property, which usually is around 39 years, all the way down to 15, 7 or even 5 years freeing up cash that can be invested back into your commercial property.
When Should Banks Get A Cost Segregation Study?
In order to determine whether your financial institution would benefit from this tax tool, there are a couple of important determining factors. Usually, banks who would want these studies done have been involved with:
- The purchase of an existing bank
- The construction of a new bank
- The renovation, remodeling, restoration or expansion of an existing bank
- Paid for leasehold improvements
- Planning for a future 1031 exchange
Why Take Advantage of Cost Segregation?
Having your property’s deprecation time reduced by over 20 years is a huge deal for most commercial property owners. Some of the overall benefits for your company when you get this study done and receive these benefits include:
- Increased cash flow that can go directly back into your bank
- Large income tax deferrals
- Substantial catch-up depreciation to correct any improper depreciations
- Bonus depreciation qualifications to see if you can take out immediate deductions for certain purchases
- Audit protection that you know is secure from the IRS
- Breakdown of building costs and peace of mind knowing all areas of your property are correctly examined
- Accurate and verified depreciation schedules of your property
Receive Help From the Professionals
Going through the steps of getting a cost segregation study done can be a very long and complicated process. Having a team of professionals to help you is not only helpful but needed when completing these studies.
National Tax Group has the skills, experience and engineering staff on hand that can perform a CSS for your bank or financial institution. Give us a call at (561) 257-3436 to schedule a free consultation today.