Automating Part of a Tax Break for CRE

There’s a sophisticated tax reduction strategy for real estate. Called cost segregation, it recognizes that a property is not a unified whole. There is the land, building, HVAC, plumbing fixtures, furniture, and so on. A clever use of software to make it easier to manage is one example of subtle ways technology can help CRE.

Interior and exterior components of the property, under the tax codes, likely have different allowable depreciation periods. According to tax consultancy KBKG, “On average, 20% to 40% of those components fall into tax categories that can be written off much quicker than the building structure,” typically using 5-, 7-, and 15-year periods to lower taxes and increase cash flow.