Montana property owners are sitting on significant tax savings they may not realize exist. Cost segregation studies allow property owners to reclassify building components into shorter depreciation categories, producing substantial first-year deductions.
Mark Simonsen, CPA, Managing Partner of the Northwest Region at AE Tax Advisors, oversees cost segregation engagements for Montana property owners across every major asset class.
How Cost Segregation Works
Under standard IRS depreciation rules, commercial buildings are depreciated over 39 years and residential rental properties over 27.5 years. Cost segregation reclassifies eligible building components into 5-year, 7-year, and 15-year MACRS recovery periods.
With current bonus depreciation rules, reclassified components can be depreciated 100% in the first year. For a $500,000 building, a typical study might reclassify 25-35% into accelerated categories, producing $125,000 to $175,000 in first-year deductions.
Montana Property Types That Benefit
- Ranch properties with barns, fencing, irrigation systems, and outbuildings
- Short-term rentals in Big Sky, Whitefish, Glacier, and Flathead Lake areas
- Commercial buildings in Billings, Missoula, and Bozeman
- Multifamily housing with common areas and site improvements
- Agricultural facilities with specialized equipment and storage
Look-Back Studies for Existing Properties
Property owners who purchased buildings in prior years can still benefit. A look-back study applies cost segregation retroactively through Form 3115, producing a one-time catch-up deduction without amending prior-year returns.
Own property in Montana? Find out how much you could save.
Contact Mark Simonsen, CPA or visit AE Tax Advisors to request a free estimate.