Owner

As the owner of a commercial building, your interest in cost segregation probably boils down to three questions: As the leading engineering firm working exclusively with cost segregation projects, we provide you and your advisors with the experience, quality and protection that comes from working with a dedicated and experienced team of professionals.

Benefits

If you are paying income tax and have a commercial building that you bought, built or renovated after 1986, a cost segregation study can put you in a position to get what amounts to an interest-free loan from the federal and state governments. The typical owner of a million-dollar commercial building will realize an extra $100,000 in cash flow by doing a cost segregation study. In most cases, between 25% and 50% of the value of a qualified building can be accelerated from a 27.5 or 39-year straight line depreciation schedule to a 5-year depreciation schedule.….more. What it looks like.

Cost

Fees for cost segregation studies can vary considerably, as can the quality. Ultimately four factors determine a study’s value: Identifying all of the building items that can legitimately be accelerated requires specialized construction and engineering expertise and in-depth knowledge of the tax laws, IRS rules and court cases governing cost segregation studies. Before engaging a study, an owner should get a preliminary review and analysis and either a fixed-fee or a not-to-exceed proposal from an engineering firm that specializes in cost segregation. IRS guidelines state that “a cost segregation study from a construction engineer is more reliable than one conducted by someone with no engineering or construction background.” If you are going through your accountant, ask if they plan to use another accounting firm or an engineering firm to perform the study. …..more

Risks/Downsides

There is no legal or increased audit risk to doing a cost segregation study. Cost segregation is an established, recognized, and proper procedure according to the IRS.

The question therefore is actually one of value. Does engaging a study make financial sense? As we said earlier, applying a cost segregation study is like getting an interest-free loan from the state and federal governments, and like any ‘loan’ it will eventually have to be paid back. “Interest-free” does not mean there are no associated costs. If the money you save in taxes will only be used for a short period of time, then a study may be of limited benefit. But if you can use the funds and your effective cost over time is only 1% or 2%, it can make a lot of sense.

Bottom Line

The studies conducted by Cost Segregation Services save clients literally hundreds of millions of dollars each year.

Cost Segregation Services has completed thousands of engineered cost segregation studies since the landmark 1997 case HCA vs. Commission and has never been successfully challenged by the IRS. In the unlikely event of an audit, we will present one of our engineers, at our expense, at the audit to defend any challenged point.

800-480-0741

info@uscostsegregation.com