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If you have purchased, constructed, remodeled, or even expanded any real estate, you most likely qualify for an immediate tax reduction.

Cost Segregation Study

If you have purchased, constructed, remodeled, or even expanded any real estate, you most likely qualify for an immediate tax reduction.

A cost segregation study is a strategic tax planning tool that accelerates your tax depreciation deductions and defers federal and state income taxes.

What is a Cost Segregation Study?

A cost segregation study is a strategic tax planning tool that accelerates your tax depreciation deductions and defers federal and state income taxes. Normally a building structure is set to depreciate over 39 years (27.5 for residential rental properties) using a standard straight-line schedule. 

 

This is accomplished by having a detailed Cost Segregation study that dissects and identifies all property related components and puts them into their most tax efficient depreciation categories. Some examples of items you can depreciate faster are cabinets, plumbing, landscaping, marquee signage, parking lots, etc... 

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Once a Cost Segregation Study is performed you will receive instant tax benefits by accelerating depreciation deductions and deferring federal and state income taxes. It will also help you maximize your write offs in the future if any remodeling is done as you will have a cost report of the building. Giving you more cash upfront and more money to reinvest into your company.

Tax Categories

Modern Office Building

  • Real Property (1250) - 39 Year depreciation life for commercial buildings or 27.5 for residential rentals

  • Qualified Improvement Property - 15 Year depreciation life

  • Land Improvements (1250) - 15 Year depreciation life 

  • Tangible Personal Property (1245) -  5 or 7 year depreciation life 

  • Land - Not Depreciable

Our Process

We start our cost segregation study with a complimentary estimate of the potential benefits and fees to perform a study for the specific buildings. This is where we would gather additional information. 

For a building that was purchased, additional information can include:

  • Closing purchase documents 

  • An appraisal

  • A property condition report

  • An American Land Title Association (ALTA) site map or survey

For a building that was constructed or remodeled, additional information can include:

  • Construction drawings 

  • Overall project costs

  • Change order details and general contractor costs

  • Vendor Invoices

The next step would be for our team to run an engineering analysis where we would:

  • Complete a site tour of the property

  • Examine all documents and other related items

  • Reclassify all cost information components, including land improvements around the site and personal property within the buildings

The last step involves compiling our findings into a final deliverable. This report would include:

  • Methodology

  • Photos of the property

  • Results of the study

  • Tax Law Supporting the asset reclassifications

Fill out the form below to receive a complimentary benefit estimate:

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