The Entrepreneurial MD's Podcast this week is on an intriguing and obscure topic - previously unknown to me, and to many physicians I suspect. However, it involves tax savings!
Are you an owner or even part-owner of a commercial medical office building?
Or thinking of becoming one?
Or other commercial real estate?
If so, it's time to sit up and pay attention as this information could make you smile, while Uncle Sam frowns.
In a podcast interview with Cherie Brown of Cost Segregation Services Inc (CSSI), I learned that there are relatively new accounting regulations that permit a commercial business owner paying income taxes to accelerate the depreciation on the building, thereby freeing up lots more available cash flow each month.
From their website:
"Cost segregation is the IRS approved method of re-classifying components and improvements of your commercial building from real property to personal property. This process allows the assets to be depreciated on a 5, 7, or 15-year schedule instead of the traditional 27.5 or 39-year depreciation schedule of real property. Thus your current taxable income will be greatly reduced and your cash flow will increase."
Although this may sound like dry "accounting-ese", I hope that the idea of saving beacoup bucks is catching your attention!
In order to qualify for cost segregation, you need an engineer's report that details all the specifics of your building - carpeting, cabinetry, wall attachments, walls, floors, ceilings etc! That is where CSSI comes in - they are the engineering company that generates the report for your CPA.
The good news is that Cherie is a capable translator, who manages to make an arcane topic understandable.
Questions, anyone?? :-)