Have You Owned Your Building for Over a Year?
Sep 12, 2024
You Can Still Benefit from Cost Segregation!
Many property owners think that in order to claim cost segregation, you must do so in the year of purchase, but that’s not accurate. While getting a cost segregation study immediately after purchase or during renovations is usually the best choice, we often encounter clients who have owned their commercial buildings for over a year and want to apply these benefits retroactively.
Thankfully, IRS Form 3115, "Application for Change in Accounting Method" allows you to change your depreciation method without amending past returns, ensuring you can keep more money in your business while maximizing tax savings.
What is the 3115 Form and Why Does It Matter?
The 3115 form, which is filed by your CPA, enables taxpayers to correct or change their accounting methods, specifically regarding depreciation schedules. Normally, property owners depreciate a commercial building over 39 years (27.5 years for residential rentals), missing out on accelerated depreciation opportunities. Our team offers the highest quality Detailed Engineering study, Approach 1 & 2, which identifies each and every component of the building that can be depreciated over shorter time frames: 5, 7, or 15 years as dictated by IRS code.
Form 3115 allows you to apply this updated depreciation schedule retroactively, without the need to amend prior tax returns. Instead, you claim the "catch-up" depreciation in the current year, known as a Section 481(a) adjustment. Using our Detailed Engineering methodology, the result is a substantial tax deduction, averaging 20-45% of the property’s purchase price, allowing you to keep more money in your business, improve cash flow, and reinvest in other opportunities.
For many Cost Seg America clients and their CPAs, the 3115 form is the key to unlocking hidden tax savings. Instead of letting those benefits slip through their fingers, they can recapture years of missed depreciation in one go, boosting liquidity and reducing tax liability. Request a Free Depreciation Chart NOW.
Contact us to see if COST SEGREGATION is a good fit for your business.
Free 15 minute call to see if you qualify.
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