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Think Fast

Take advantage of faster depreciation.

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

There's good news for entrepreneurs who own business realestate. Recent guidelines from the IRS indicate that the tax agencyis now more receptive to business owners accelerating depreciationon buildings already built or being built. Properties with the besttax-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 termsthan it will be worth in the future. Another benefit is increasedcash flow.

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

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