successful Cost Segregation starts with an Understanding of the “Depreciation” Incentive
There are two accounting options that can be used for Rental Property.
Option 1.
Use one category for depreciation and lump all the components into this one category. This is what most tax accountants are familiar with. Obviously, this would have to be the category that gives the least amount
of depreciation to be compliant, and the property owner ends up with the least amount of deductions year after year.
Option 2.
Segregate all the components of the property into their specific category. This is a more accurate accounting method. These designated categories give a larger amount of depreciation back to the property owner.
Previous year’s tax returns that were not done this way can be updated. This can result in a substantial refund.
Why do Rental Property owners get this Depreciation write off?
The IRS comes up with incentives to get people to do certain things with their money. Buying assets enhances the community. So, for businesses the IRS gives businesses the total cost of some assets over time in the form of depreciation. TAKE ADVANTAGE OF IT!