In today's competitive commercial real estate market, you need to use every tool available to make a deal happen. One tool that is underutilized that could make a difference in creating a viable deal from one that is border line is a Cost Segregation Study.

How can a Cost Segregation Study help? (I'll explain what a Cost Segregation Study is later.) The future owner benefits from the study by creating tax benefits that result in almost immediate increased cash flow. All this can occur very soon after the purchase of the property. So this can be taken into account when working the numbers in a deal. The increased cash flow can push the deal over the top. It will also put the owner in a position for additional transactions sooner than anticipated.

Cost Segregation is a strategic tax benefits tool that allows property owners who have constructed, purchased, expanded, or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.

Cost Segregation is the identification, separation and reclassification of building components to shorter, accelerated depreciation lives that are less than the traditional 39-year life required for the building itself.

In general, it is easy to identify furniture, fixtures, and equipment that are depreciated over 5 or 7 years for tax purposes. However, a Cost Segregation Study goes far beyond that by dissecting construction costs that are usually depreciated over 27