The combination of recent tax law changes, new IRS pronouncements, and a procedure referred to as Cost Segregation can generate very significant tax savings for owners of commercial real estate. This tax saving strategy involves the following:

• Through a process referred to as Cost Segregation, the elements of a building are analyzed to determine if they qualify for a shorter depreciation life. Most of the costs of a building are usually depreciated using a straight-line method over a life of 39 years. A Cost Segregation study can convert some of those costs to a life of 5, 7, or 15 years. Besides the shorter life class, these costs would also be eligible for an accelerated method of depreciation.
  
• Some of the costs converted may also qualify for the first year 50% bonus depreciation created by recent economic stimulus legislation.
  
• Some of the costs converted may also qualify for the $100,000 Section 179, Immediate Expensing Option.
  
• A Cost Segregation study may be performed on either new or existing buildings. If performed on existing buildings placed in service after 1986, a deduction for the previously unclaimed depreciation "catch up" can be claimed in the current year.