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Think Fast

Take advantage of faster depreciation.

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This story appears in the December 2004 issue of Entrepreneur. Subscribe »

There's good news for entrepreneurs who own business real estate. Recent guidelines from the IRS indicate that the tax agency is now more receptive to business owners accelerating depreciation on buildings already built or being built. Properties with the best tax-savings potential include retail stores and chains, restaurants, office buildings and warehouses. As you know, accelerating a tax deduction is worth more in today's terms than it will be worth in the future. Another benefit is increased cash flow.

You may want to have a cost segregation study (CSS) performed on your property. A CSS is a review of all the costs associated with the purchase or construction of a building. This helps classify costs as either real or personal property. The professional doing these studies must understand the tax code and have sufficient knowledge to work with architects, engineers and appraisers. Depending on the complexity of the project, all or a few of these professionals may be involved.

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