What potential tax savings may be lost by neglecting to take advantage of accelerated depreciation?
Accelerated depreciation adheres to well found interpretations of the Internal Revenue Code sections, applicable court cases and revenue rulings. Under IRS Revenue Procedure 96-31, real estate owners can change their method of accounting in order to re-compute the allowable depreciation and claim a retroactive adjustment for previously filed tax returns for both open and closed tax years. This creates an opportunity to correctly classify fixed assets and claim the entire difference between the allowable depreciation and the depreciation actually taken on past tax returns. Through four equal annual adjustments, real estate owners can correct what may have been years of incorrect property depreciation write offs and realize large tax savings.
