What if a simple misunderstanding could cost you thousands in missed tax deductions? Carlos from US Tax Advisors Group dives into one of the most critical -and often misunderstood- foundations of a cost segregation study: Land Allocation.

Since land is non-depreciable, it must be accurately separated from your building's total purchase price to establish your "building basis." This basis is what gets segmented into 5-year, 15-year, and 39-year property.

"The higher the land allocation, the lower your building basis. The lower your building basis, the lower your yield in accelerated depreciation."

The #1 Mistake Investors make is assuming land allocation is a fixed dollar amount from an appraisal or tax record. It's not. It's a percentage of the total property value at the time of purchase.

And How Can You Find Your Land Allocation? This value must come from you or your CPA, using:

• County Tax Assessor Records (using the percentage method)

• Property Appraisals (look for the "Cost Approach" and "Site Value")

• Your CPA's recommended methodology

Important Note: If the property is already in service and depreciating, the land allocation should already be established on your existing depreciation schedule.

Don't Let a Foundation Error Weaken Your Tax Strategy.
An accurate cost segregation study is built on precise data. Ensuring your land allocation is calculated correctly is the essential first step to maximizing your cash flow.