Alternative Minimum Tax consequences are not a result of cost segregation. Nor is cost segregation accelerated depreciation. Decisions regarding cost segregation and accelerated depreciation are independent by the four options as illustrated in the following matrix:
Accelerated depreciation increases the amount of depreciation taken in early years of ownership but triggers alternative minimum tax consequences. The alternative minimum tax consequences are severe enough that many investors avoid accelerated depreciation.
A cost segregation study delivers the benefits of more depreciation sooner without the unfavorable alternative minimum tax repercussions. There are no alternative minimum tax consequences resulting for using cost segregation. Cost segregation with straight-line depreciation increases depreciation by 50% to 100% during the early years of ownership without triggering alternative minimum tax penalties.
Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.
City:
New York, NY
Houston, TX
Washington, DC
San Francisco, CA
Memphis, TN Dallas/Ft. Worth, TX
Denver, CO
Phoenix, AZ
Orlando, FL
Philadelphia, PA
Cincinnati, OH
Madison, WI
McAllen, TX
Chicago, IL
Tulsa, OK
Austin, TX
Dayton, OH
Honolulu, HI
Stockton, CA
Boise, ID
Charlotte, NC
Durham, NC
San Jose, CA
Nashville, TN
Baton Rouge, LA
Buffalo, NY
Birmingham, AL
Indianapolis, IN
Manchester, NH
Oxnard, CA
Cost segregation produces tax deductions for virtually all property types.
Property Type:
Truck terminal
Airplane hangar
Retail
Apartments
Convenience store
Single-tenant retail
Movie theatre
Health spa
Self-storage
Bowling alley
Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.
Industry:
Textile product mills
Electronic and appliance stores
Truck transportation
Arts, Entertainment, and Recreation
Day care facilities
Furniture stores
Building supply dealers
Plastic and rubber products manufacturing
Chemical manufacturing
Computer and electronic manufacturing
O’Connor & Associates is a national provider of commercial real estate consulting services including cost segregation, due diligence, federal tax reduction, renovation upgrading cost analyses, tax return review and apartment inspections.
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