Some of the best real estate appraisers in the United States were consulted for their opinions regarding the assumptions made in using a straight line depreciation
rate of 20/o in projecting the future values of frame residential properties.
Also, the asset's salvage value will be zero, the firm's weighted average cost of capital is k = 10%, the corporate tax rate is 33%, and straight line depreciation
over the 20 year economic life of the asset is used by both the firm and the tax authorities.
The benefits of a cost segregation study far outweigh the cost as typically 15% to 45% or more of a building's assets can be reclassified from a 39-year straight line depreciation
schedule to a five or seven year accelerated period.
We support legislative efforts to strengthen the depreciation and recapture provisions applicable to the sale of real property by rejecting or repealing discriminatory provisions which limit or disallow existing deductions and by making subject to recapture only that portion of depreciation taken that exceeds straight line depreciation
If the taxpayer does not use cost segregation, it must use straight line depreciation
over 39 years.
For the same asset, the use of straight line depreciation
, higher salvage values or longer useful lives will result in higher carrying values and thus increased probability of recognizable impairment losses.