Taxpayers engaging in new construction or who are adding leasehold improvements can take advantage of enhanced depreciation on certain real estate or leasehold expenditures. The 2008 Economic Stimulus Act included provisions permitting taxpayers to claim a 50 percent first-year bonus depreciation on certain types of properties. The recently enacted American Recovery and Reinvestment Act of 2009 extends those bonus depreciation benefits until January 1, 2010.
The 50% first year bonus depreciation is available to taxpayers where construction began between December 31, 2007 and before January 1, 2010 under the terms of the recently enacted law.
A $1.00 investment in 39 year property would yield approximately $0.26 in depreciation deductions ($1.00 divided by 39 years) assuming full year convention. That same $1.00, if reclassified as 7 year property through a cost segregation study would yield a first year depreciation deduction of $0.70 ($0.50 bonus depreciation plus $0.20 calculated using a 200% declining balance depreciation scheme).
The only way to accurately assess the benefits is to perform an engineered cost segregation study.