High net-worth individuals, accredited investors and other high-income earners who have real estate assets in their portfolio can obtain significant cash-saving, tax-lowering benefits through the utilization of “component analysis” that provides significant accelerated depreciation on the “life of a building.”
National tax consulting firm, “Tax Saving Professionals” has added another proven, high-impact, tax-lowering strategy for clients that own buildings.
“Depreciation has been a long-time accepted IRS expense brought to a new level by using Cost Segregation and an engineering firm to assess and calculate the buildings depreciation schedule,” says Ray Phair, COO. Tax Saving Professionals, founded in 1998, whose client base of high net-worth individuals and accredited investors includes doctors, lawyers, dentists, bankers, brokers, car dealers, and highly-paid career professionals from across the country.
Phair points out some key attributes of this tax-lowering approach: “The marriage of engineering science with generally underutilized but highly-specialized principles of tax and accounting provides financial solutions that create increased cash flow, minimized tax payments, and maximum return on investment.”
For example, standard depreciation is 39 years on a flat line assessment, our engineering partner reviews building plans performing calculations on “component life expectancy” which generally yields an accelerated depreciation.
Requiring highly-specialized expertise, this accounting method is proven, valuable and IRS accepted and preferred using calculations that depreciate “pieces of the building by the components life” and not the “building life,” which is a huge difference, producing an accelerated depreciation schedule. Many items like carpet, paint, HVAC etc. will be fully depreciated in the first 5 years in this method.
“To depreciate a building is typical,” says Bob Barth, Lead Tax Pro and California attorney for Tax Saving Professionals, “but our partners are subject-matter experts and perform this “component analysis” to obtain the greatest depreciation and tax-lowering consequence out of a building asset.”
In addition, there are other benefits to this tax approach that creates “a wind fall of deductions” that can be utilized in financing other tax strategies creating a double dip of sorts in the tax savings column. CPA’s have long known about building depreciation and accelerated depreciation but the main piece missing is the engineering review to assess the valuations and remaining life. Without a site visit a tax pro can only assume a valuation whereas eyes on the system provides an owner the best valuation yielding the most significant tax saving/tax-lowering results for a building owner.