Many commercial property owners are struggling right now, contemplating how they are going to cover the next mortgage payment to their lender.

While state governments are exploring ways to re-open the economy and create a way for them to generate revenues again, counting on such promises is dicey at best, given the propensity for COVID-19 to re-ignite.

Besides relying on the unpredictable assistance of the federal and state governments, commercial property owners have another option – Cost Segregation studies. Cost segregation involves accelerating the depreciation of certain aspects of the physical property, so that the property owner can benefit financially.

The Internal Revenue Service endorses Cost Segregation studies. However, there is a tremendous amount of art to the science, causing many an accountant to walk away from such projects, and stay with the tried and true 39-year straight-line depreciation. That’s why these studies are best handled by someone who specializes in performing them

In fact, Cost Segregation studies are perhaps the most underutilized benefit in the tax code. They fly well under the radar of most property owners, primarily because accountants and CPA firms typically stick to what they know.

Meanwhile, benefits to the property owner are extraordinary, since they are able to minimize their taxes, while increasing their cash flow.

COVID-19 Heightens the Importance of Cost Segregation Studies

These studies are even more important during the current pandemic, especially as a tool to lessen tax liability.

Let me explain. Many property owners may be contemplating  a ‘cram-down deal’ as a way to renegotiate an onerous lease with a lender.

This involves “a debtor changing the terms of a contract with a creditor,” which “reduces the amount owed to the creditor,” according to Investopedia.

Such measures may benefit the creditor, or lending institution, which can write off a bad loan and incur tax benefits.

However, the debtor, or property owner, incurs a tax liability in this scenario because they have realized a financial gain on the renegotiated loan, or settlement. Many property owners are not aware of this until tax time, when it is too late.

Cram down loans were very common during the real estate crash of 2008 and 2009.

What were less common at the time were Cost Segregation studies, the best friend to the property owner, creating an optimal way to balance out that tax liability.

Want to work with one of the nation’s premier cost segregation specialists?

Find out whether your commercial property qualifies for this lucrative tax benefit today by completing the form at

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