2018 Tax Act & Cost Segregation

Benefit Loss is Imminent

A cost segregation filed with their 2017 taxes is worth 40% more than one filed next year. The value of the depreciation as a whole just took a huge hit with this change, and this is the last year you are allowed to do a “catchup” and reclaim all that money.

Buildings purchased during years where tax rates were at their highest and depreciated under the assumption that they would get those deductions “over time” are no longer valid.

Now due to the tax changes you will still get some of your money, but it is at 21% instead of 35% (therefore, the overall deduction is worth 40% less next year than it is this year).

A comparison of the value of depreciation and cost segregation on Commercial property on  a 2017 tax return with $3,900,000 Purchase price in 2013:

When you purchased this property you assumed you would get a 35% deduction every year you owned it.


Value if you completed a Cost Segregation in 2018 and filed with 2017 Taxes and could accelerate 30% of buildings contents:

30% of $3.9M Poperty                =  $1,170,000
less previous deduction taken  = -$   500,000

$  670,000 x 35% = $234,500

Wait till 2018 when tax rate is 21% and your $35,000 deduction becomes $21,000.

$670,000 x 21% = $140,700  (40% less)

Not doing the cost segregation on your 2017 taxes will mean a permanent 40% loss in all future depreciation.