Own a Building? Don’t Miss Out on These Tax Opportunities!

November 29, 2012
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If you currently own a building, or are thinking about buying, constructing, or renovating a building, there are three key items you will want to consider. 
  • First of all, could a cost segregation study benefit you?  A cost segregation study is an in-depth, engineering-based analysis of the costs associated with the acquisition, construction, or renovation of a building.  When a study is done properly, it results in additional accelerated depreciation deductions that will increase your cash flow.  This is done by assigning shorter depreciable lives to assets that would otherwise be categorized as building or 39-year property. 
  • The second consideration is about energy efficiency.  Significant federal tax deductions for creating energy-efficient commercial projects often go unutilized.  Section 179D offers commercial and industrial building owners the ability to take an accelerated tax deduction of up to $1.80 per square foot when incorporating energy efficient improvements in their property.  Energy efficient improvements may be made to the building envelope, HVAC, or interior lighting.  If you have an old building, lighting is usually the easiest item to take advantage of.  If you plan to construct a new building, please consult with your tax advisor so you can do some “tax engineering” before the building plans are final. 
  • The final consideration is how to properly handle repairs and maintenance of a building.  In years past, the IRS allowed many repairs to be expensed, now it is changing its view point on this and requiring many repairs to be capitalized (roof repairs, windows, and doors are a few examples).  This is a very important and complex development that may result in many building owners having to file additional tax forms in order to adopt/comply with the new rules.
For more information on any of these strategies, or to discuss how they may apply to your business, please contact Jason Brandner at jbrandner@wipfli.com or your Wipfli relationship executive.

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