Owners of restaurants and other dining establishments who have recently built or remodeled their property have the opportunity to earn more back on their properties by using a strategic tool tax known as a cost segregation study.
This study takes properties like restaurants that usually depreciate over a period of 39 years and cuts the depreciation time to 5, 7, or 15 years. Lessening the time it takes to receive these tax deductions can directly impact the amount of money owners are making on their properties and allows them to reinvest in additional properties as well.
What Does A Cost Segregation Study Consist Of?
Cost segregation studies are engineering-based studies that give property owners an exact tax plan to accelerate property depreciation to increase cash flow for owners. The study aims to reclassify certain assets of the restaurant depending on various aspects of the building.
The study is normally performed on properties that have recently been constructed, remodeled, or purchased, however, property owners can also retrieve missed deductions from previous years.
How Would A Cost Segregation Apply To Restaurants?
In order to fully determine what would qualify as reclassified assets for a restaurant property, a full cost segregation study would need to be performed. However, some of the most common items that can be reallocated are:
- Carpeting, vinyl, and epoxy flooring
- Canopies and awnings
- Kitchen equipment gas systems
- Sound systems
- Equipment related electrical and plumbing connections
- Decorative light fixtures
- Kitchen storage and preparation equipment
Keep in mind that 38-year building shell and interior improvements are treated as depreciable assets for restaurant owners.
I Think I Would Benefit From This Study, What Are My Next Steps?
The most important next step would be connecting with a team of tax specialists who can help your restaurant conduct a cost segregation study.
Here at National Tax Group, we have a team of tax professionals who partner with qualified engineers to help with your cost segregation study needs so you can feel confident you’re receiving the maximum tax benefits possible. Give us a call at (561) 257-3436 and talk to one of our specialists to find out more.