Building Cost Segregation

Building Cost Segregation Tax Benefit Situations that significantly increase cash flows for property owners include:

  • Inherited Real Estate
  • New Construction
  • Purchase Price Allocations
  • Real Estate Acquisition
  • Section 754 Basis Step-Up
  • Section 1031 Exchanges
  • Tenant and Leasehold Improvements

How is the significant present value tax benefit achieved?  Commercial real estate generally qualifies for 39 year life cost recovery (depreciation).  However, most buildings do have special 3, 5, 7, and 15 year assets, the costs of which can be “segregated” or isolated from the building itself.  By identifying such special assets and segregating the related costs from the building, the resulting acceleration of depreciation deductions creates significant income tax present value benefits.

To qualify for this special tax opportunity, the Internal Revenue Service requires an “independent” engineering based cost segregation analysis that identifies these assets and their costs.  Our principals have the necessary financial accounting, tax, engineering and real estate valuation experience and credentials to provide the most cost effective outcome for you, including the issuance of a qualifying report for the IRS and your tax accountant.

Contact us today for a no cost study feasibility review for your real estate!

TYPES OF PROPERTY COMMONLY UTILIZING COST SEGREGATION STUDIES

  • Assisted Living
  • Apartment
  • Hotel / Motel
  • Financial Institution
  • Fitness / Health Club
  • Golf / Resort
  • Grocery / Supermarket
  • Health Care
  • Computer Operations / Technology Center
  • Manufacturing / Process / Pharmaceutical / Printing
  • Office Building
  • Restaurant
  • Retail Stores and Malls
  • Self Storage
  • Specialty Warehouse
  • Theatre
  • Vehicle Dealership

JUST A FEW OF THE SCENARIOS WHERE VALUATIONSUSA® CAN HELP

  • If you own real estate and need to reduce income taxes and increase cash flow.
  • If your business will be investing greater than $500,000 in leasehold improvements.
  • If you plan to invest or in the last three years have invested more than $1,000,000 in a building remodeling or purchase.
  • If you have received a building worth more than $1,000,000 through an estate bequest.

WHAT OTHERS ARE SAYING ABOUT COST SEGREGATION

“Combining Cost Segregation and Section 1031 exchanges allows taxpayers to defer the maximum amount of income taxes.” — AICPA Journal of Accountancy, The Best of Both Worlds 

“When it comes to real estate acquisitions, the jewel of cost segregation is that it yields enhanced depreciation deductions…there can be astounding differences in outcomes between using and not using it.” – AICPA Journal of Accountancy,  Cost Segregation Applied

“The primary goals are to provide examiners with an understanding of:
  1. why cost segregation studies are performed for federal income tax purposes;
  2. how cost segregation studies are prepared; and,
  3. what to look for in the review and examination of these studies.”

IRS Cost Segregation Audit Techniques Guide, Purpose of the Cost Segregation Audit Techniques Guide