What Is Financial Component Segregation?

As a savvy business or commercial property owner, you no doubt understand how important it is to be prepared for tax season. Countless otherwise-successful business owners have seen a complete reversal of their fortune based solely on an unexpectedly-high tax bill. That’s why making the most of your tax preparation is essential when you own any kind of business or commercial property.

As tax season looms in the distance, you might be worried about how high your tax bill will end up being. If that sounds like you, it might be time to consider cost segregation in Georgia.

What is cost segregation?

In its simplest terms, financial component segregation is easy to understand. Let’s say you own a hotel. A financial expert can look at your property and divide the individual components (carpets, wall coverings, furniture, etc.) that comprise the property into various line items.

Dividing your individual assets into individual costs can have a dramatic impact on your tax bill, thanks to depreciation.

What is depreciation?

You might be familiar with the term “depreciation”—it refers to a loss in the value of your assets over the course of their useful lifespan. The “useful” period is the time during which your given product will continue to remain—you guessed it—useful.

For example, if you buy a new car, you can reasonably expect it to have a useful lifespan of about 15 or even 20 years (provided you take care of it). That said, if you purchase your car for $20,000, you cannot expect that the value of the vehicle will still be $20,000 after 20 years. It will be worth much less, closer to $7,000 or so. That loss in overall value is called depreciation.

How does depreciation factor into taxes?

When it comes to paying the taxes on your commercial real estate, cost segregation in Georgia can save you a bundle. By dividing the components of your property into similar groups with similar useful lifespans and then depreciating them based on that timeline, a talented tax team can work wonders.

In a cost segregation study, a financial pro will identify each component on your property and quantify its value. Then, the expert will allocate the total cost of your property before reclassifying each of your separated costs according to legal precedent. From there, your individual parts will be assigned new tax lives, and your costs will be reconsidered to take into account a longer or shorter depreciation rate.

Your financial experts

If you’re interested in learning more about cost segregation in Georgia, come to Property Tax Eagle of Georgia, LLC. We have more than a decade of experience helping business owners in a wide variety of industries pay smaller tax bills. That’s our purpose, from top to bottom. If you think you’re paying more taxes than you actually owe, you may be right. All it takes is one call to one of our pros, and we’ll take it from there.

Let Property Tax Eagle of Georgia, LLC provide the top-notch mediation, assessment and advisory searches you deserve. Call today to schedule an appointment.

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