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  Cost segregation allows multifamily investors to reduce their federal tax liability.  Generally, when it comes to investing in multifamily properties, investors want to take reasonable measures to expand their returns. One of the most effective ways to do this is to reduce their income tax liability via cost segregation, which greatly increases the rate at which investors can claim tax deductions. Generally, the IRS depreciation period is 25.7 years for multifamily real estate, whereas depreciation period for other commercial real estate is 39 years. However, cost segregation allows investors to take their deductions over a 5, 7 or 15 years period, greatly expanding their cash flow.  For example, if an apartment building worth $1 million was being depreciated over 27.5 years, an investor would be ready to take a depreciation deduction of around $36,300 per annum. If that depreciation was appropriated for a 7-year period, the investor would be ready to take a staggering ...

  Cost segregation is a highly beneficial tax planning strategy utilized by real estate investment companies to accelerate depreciation deductions, defer tax and improve cash flow.  Cost segregation studies can benefit taxpayers who purchase, construct, expand, or renovate real estate property.  A study can take the cost of each component of a qualifying real estate investment and reclassify and break it down among shorter recovery periods; in turn, you can accelerate depreciation, uncover missed deductions, reduce tax liability, and increase cash flow. Accessing these benefits may be challenging without the help of a cost segregation study. Benefits of a Cost Segregation Study Increase in cash flow Reduction in current tax liability Deferral of Federal Income Taxes Ability to recapture past years Does Your Property Qualify For Cost Segregation? Any type of a commercial property placed into service after 1986 qualifies for cost segregation. Typically properties with a dep...