For Owners, Controllers, and CFOs: A Must Read!

As we all know, manufacturers have been pressuring dealers to renovate for years. Dealers are spending millions to “Keep up with the Joneses” whether it be a full rebuild, a redesign, or even just a makeover. The majority of dealers consider these remodels to be major events, spending thousands on temporary structures and off-site storage facilities in addition to the revenue lost from sales and service. It is also a nightmare for the staff and clients. You understand what I mean if you’ve ever worked in a temporary trailer during a chilly Colorado winter.


The majority of dealers are unaware that there is a sizable tax credit available for remodels.  I understand what you’re thinking: “My accountant takes care of that.” Not nearly, and the simple explanation is that it is outside of their area of competence. The majority of building owners and CPAs lack experience with cost segregation, despite the fact that some of them do. True instructors are hard to come by in this sector, which regrettably contributes to a lot of misinformation. Numerous thousands of building owners have been left out of this effective tax-saving method as a result of these circumstances.  The reason I questioned why dealers spend so much money on advertising, management systems, call centers, social media, and so on throughout my 21 years as a Fixed Ops Manager is that they never take a step back and consider how much money may be available to them to offset some of these expenses.


“You can only get these benefits on a new building, or new construction, right?” is another frequent query I receive. First of all, let me state categorically that it is advantageous to have a Cost Segregation analysis performed when you buy, develop, or renovate a new building. In reality, a study should be carried out for anyone building or remodeling a commercial facility. However, older structures show off the actual strength of cost segregation! Here is an illustration of what you might be overlooking.


Five years ago, Mr. Client paid $3,500,000 for a commercial property, but he never carried out a Cost Segregation Study.


Despite speculations to the contrary, Mr. Client is aware that he may now be able to take advantage of a study (perhaps because he read this blog post).


Mr. Client engages a specialist who finds that 20% ($700,000) of the components should have been given a 5-year life rather than a 39-year one. When Mr. Client learns that the IRS will let him “catch up” $700,000 in missed accelerated depreciation on his subsequent tax return, he jumps for delight!


The final line is that it’s still not too late to do a Cost Segregation analysis if you own commercial property. You might be able to save hundreds of thousands or perhaps millions of dollars in taxes. Take advantage of these savings right away to save money and boost your bottom line.

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