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How Cost Segregation Affects Recapture

How Cost Segregation Affects Recapture

While there is a relationship between cost segregation and recapture, the cause and effect relationship should not cause concern for many. Be wary, however, if you are not planning on holding your property for at least three to five years as cost segregation may not be the best solution for you. The recapture rate on accelerated property is ordinary income rates. Due to this, an owner can typically pay the recapture tax with the gains from the property. Over the course of holding the property, you are using the increased cash flow to invest in appreciating assets. This investing method leads to gains from the property surpassing the recapture tax, and making recapture of little concern.  

Key Points

  • Recapture is a tax at the sale of a depreciation building 
  • Don’t cost segregate if you are not holding for three to five years
  • When holding, invest in appreciating assets 
  • Recapture should not be a concern if holding the property for the recommended time

Read full article below:

https://costsegregationservices.com/how-cost-segregation-effects-recapture/ 

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