| Cost segregation is a tool billion dollar corporations have used since its
inception during the mid 1960’s. Only in recent years has this powerful
profit-retaining-tool been recognized by small to medium size companies with
incredible results. Congress approves tax savings initiatives every year; but
until recognized and applied by your tax professional they have no value to you
at all. This is where our experience pays you as many accounting firms have
limited specialize knowledge in this area. Most depreciate property over 39
years, but given there are several major areas of depreciation; why only choose
one?
This is another area where significant results can be achieved when
specialized expertise is applied. Since it cost you nothing to find out how
much you can save, it makes the decision to do so even easier.
Anyone who hasn’t applied this useful tool should consider a thorough review and
see how much your tax burden can be reduced. A savings up to 35% is not
uncommon.
How Does Cost Segregation Save Me Money?
A cost segregation study is
a strategic tax savings tool that allows companies to increase cash flow
by accelerating their depreciation deductions. This is accomplished
through deferring Federal and State income taxes. Cost segregation
studies use IRS guidelines and case law to re-classify commercial
building expenditures into more favorable depreciation categories.
The IRS recently acquiesced in the landmark court case Hospital Court
of America, et al. v. Commissioner, ruling that the tests developed
for the now repealed Investment Tax Credit remain determinant in
classifying assets as tangible personal property or structural
components of buildings. Rather than depreciating the total cost of the
building over 39 years, an engineering based cost segregation study
separates the cost of the building into tangible personal property, land
improvements and real property.
Most accountants and building owners depreciate all commercial buildings
and improvements, whether constructed or purchased, over 39 years.
But, for tax purposes, depreciable commercial real estate actually
consists of four distinct kinds of property–three of which qualify for
much faster depreciation. The cost of a commercial building
structure must be depreciated over a full 39 years. However, a
commercial building owner also purchased land improvements such as
curbs, a parking lot and landscaping. In addition, the tangible personal
property within the structure, such as machinery, the electrical,
plumbing or other construction components necessary to support tangible
personal property may also be depreciated over a period of less then 39
years. Many of these can be depreciated from 5 to 15 years.
An engineering-based study
will carve out the costs that qualify for accelerated depreciation and
segregate them into the appropriate categories. You will benefit from an
increase in depreciation and a reduction in tax burden for the next 5,
7, or even 15 years! The tax savings are already there, and
uncovering them for you is what we do.
You might ask why your
accountant doesn’t perform this function. Generally speaking, even the
best accountants don’t have the skills or the experience required. It
takes more then the detailed knowledge of applicable tax law; it
requires a background in construction engineering, cost estimation and
allocation. Completing a thorough and reliable study and then using it
to file the appropriate tax documents requires specialized knowledge.
An engineering based
cost segregation study will help clients who:
- Own commercial
property placed in service after May 12, 1993
- Bought or built
commercial property for over $500,000, including leasehold
improvements
- Are profitable and
pay Federal income tax
- Have no immediate
plans to sell their building
Our Cost Segregation
specialists are happy to provide you with an analysis of your potential
tax savings and the applicable fees involved. The proposal is free, and
you shouldn’t wait. The current IRS guidelines for a quality Cost
Segregation Study are generous and present an opportunity to recoup tax
savings lost in previous years without amending previous returns.
This is your chance to save considerable dollars and we make it easy for
you.
Fortunately, it’s not too
late to offer clients the benefits of an engineering-based cost
segregation study. Remember one of the greatest benefits are you don’t
need to amend your past tax returns. Instead, you claim all missed
depreciation from prior years by filing particular IRS forms with
your next tax return. This will result in an “automatic” IRS consent to
a change in their accounting method for depreciation.
We have a team of highly
qualified engineers and tax law experts dedicated to providing small and
medium sized commercial property owners with the same kind of cost
segregation expertise big companies have used to minimize their taxes
for decades.
Our Engineers are real
estate experts who are trained in both cost segregation and cost
estimating techniques and have worked for Fortune 100 companies before
joining our team.
Our accounting
professionals specialize in strategic tax planning and depreciation
allocation. We carefully monitor the fluid world of tax laws,
interpretations, rules and rulings to ensure every cost segregation
study complies with current IRS guidelines and takes maximum advantage
of allowable deductions. This will put more money in your pocket. |
