Cost Segregation provides significant tax savings to companies involved in the following activities:
- constructing a new building or facility
- expanding an existing building or facility
- purchasing real estate
- renovating an old building or facility
- making leasehold improvements
Our Cost Segregation Study provides significant tax savings and cash flow improvement. We seek detail isolation of depreciable acquisition expenses. The isolated expenses are then assigned to considerably shorter depreciation lives. Commercial real estate, in general, is depreciated over 39 or 27.5 years for tax purposes depending on type of property. With our Cost Segregation Study, however, these expenditures can be moved to much shorter depreciation lives (5, 7, or 15 year).
Owners/tenants of various types of property can reap significant benefits from our Cost Segregation Study. Shorter depreciation lives of certain expenditures can be found in the following types of properties:
- Distribution facilities
- Grocery stores
Information is requested of the client and reviewed by our cost segregation engineer specialists. The net present value of future depreciation savings is calculated and relayed to the client along with a completed engagement letter. The client is fully aware of the benefits to be derived and our engagement pricing.
Construction Expenditure Analysis
Clients provide information on capitalized expenditures incurred over the Study period. Our analysis will include a thorough review of historical purchase price allocations, closing statements, rent roll analysis, and details on any other capitalized expenditures.
Review of Construction Drawings and Blue Prints
Detail review of construction drawings and blue prints is imperative to the Cost Segregation Study and the shifting of assets to shorter depreciation lives. This will include an analysis of all mechanical, electrical, structural and civil aspects of the construction expenditures.
Visiting the actual locations where significant expenditures have been incurred allows us to confirm our findings from the construction drawing analysis and often unveils significant expenditures deserving shorter depreciation lives. We will look to generate additional required documentation and photographs for support of our Study.
Technical Report Generation
This phase includes the preparation and delivery of the Cost Segregation Study and its quantitative and qualitative components. The Study will serve as the client’s documentation supporting the depreciation claimed. This phase entails a full analysis of technical issues related to the segregated expenditures as well as full identification, documentation and quantification of the expenditures at issue.