Auto services facilities are unique in that they combine structural durability with high levels of specialized equipment and custom features. This means they often include a diverse range of assets that qualify for shorter depreciation schedules, which can result in significant tax savings.
For example, this facility included a wide variety of reclassifiable assets, such as:
- Specialized Equipment: Hydraulic lifts, diagnostic machines, and compressors are essential to the business, and these assets qualify for accelerated depreciation.
- Interior Finishes: Custom flooring, decorative wall treatments, and high-efficiency ceiling fans, which enhance the property’s functionality and aesthetic appeal.
- Technology Systems: Modern communication and security features, including telephone connections, key card readers, and security cameras, are integral to daily operations and qualify for shorter depreciation schedules.
- Land Improvements: Parking lots, sidewalks, fencing, and landscaping were reclassified, allowing faster cost recovery on these outdoor features.
- Building Systems: High-efficiency HVAC units, tankless water heaters, and energy-saving LED lighting offered dual benefits—operational cost savings and tax advantages.
- The key is to work with a qualified cost segregation specialist who uses engineered software that can review your specific situation and assets to determine if a study would be beneficial, regardless of whether you own or lease your business premises.
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