Benefits of Using Cost Segregation

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Because cost-segregation studies require combined expertise in construction, engineering, and accounting, it is important to work with qualified professionals. Engineering firms typically perform the study, but the Internal Revenue Service has strict guidelines for qualified cost-segregation studies.

Our team of experts identify assets and their costs, and classify those assets for federal tax purposes. In a Fully-Engineered Analysis Study certain costs previously classified as subject to 39-year depreciable life, can instead be classified as personal property or land improvements, with a 5,7, or 15-year rate of depreciation using accelerated depreciation methods.

Our study allows a building owner to depreciate a new or existing structure in the shortest amount of time permissible under current tax laws.

THIS RESULTS IN…

  • Substantial savings on income taxes – Reduce overall tax burden
  • Frees up capital – Generates new positive Cash Flow

Who Will Benefit from a Fully Engineered Cost Segregation Study?

A fully engineered study conducted by our team of talented experts in the areas of engineering, accounting, construction and consulting professionals can assist you in identifying opportunities to claim accelerated depreciation. A study is beneficial if you are:

  • Acquiring an existing building
  • Building a new facility
  • Renovating, expanding or improving an existing building
  • Conducting leasehold improvements on a facility

A fully-engineered study works most efficiently for new buildings projects while they are still in the design stage or under construction, but can uncover numerous retroactive deductions for older existing buildings as well.

Existing commercial property owners are often overlooked as we can “look back” and catch up all remaining depreciation without amending the tax return.

 What are the main benefits of a fully-engineered study:

  • An immediate increase in Cash Flow
  • The deferral of taxes
  • A decrease in current tax liability
  • The ability to reclaim “Missed” depreciation deductions from prior years (without having to amend tax returns)

This opportunity to recapture unrecognized depreciation in one year presents an opportunity to perform retroactive cost segregation analysis on older properties to increase cash flow in the current year.

No amending of tax returns to benefit

There are two different ways to take the loss:

    • Carry it back 2 years, or forward, until it is completely absorbed
    • Bring it forward will require an automatic change in Accounting Form 3115
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