Cost Segregation

WHAT IS COST SEGREGATION?

Cost Segregation is a lucrative tax strategy approved by the IRS in 1997 to reclassify specific real property assets that usually receive a depreciation life of 39 years (commercial real property) or 27.5 (commercial residential) into “tangible personal property” that is treated as five (5) year property or land improvements which are treated as fifteen (15) year property for depreciation purposes. Due to improved treatment, portions of the electrical, plumbing, mechanical systems, and site improvements of a building along with hundreds of other components can be allocated into shorter lives translating into immediate cash flow.

WHO / WHAT QUALIFIES?
  • Any commercial building type qualifies
  • Building Cost (Land Excluded) $750,000 and above
  • Plan on hold building for a minimum of 3 years
  • Plan on doing a major demolition or renovation
  • Plan on making energy or building upgrades
  • Note: The IRS allows us to do a look back study w/o amending returns to capture missed depreciation
THE VALUE OF MONEY:

This effectively increases tax payer’s depreciation expense in today’s dollars. By recouping up to 25% – 40% of the building cost over the first 5 years as opposed to depreciating it over 39 years, translates into significant tax savings and taps into the concept of the “time value of money”.

HOW MUCH CASH ARE WE TALKING ABOUT?

On average, a CORE Cost Segregation Study offers approx. $150,000 in additional depreciation per $1 million dollars in purchase or construction cost over the normal 39 year straight line method.

CORE BUNDLED SERVICES:
  • Disposition Study
  • 179D Energy Study
  • 45L Credits
  • Utility Refund Study
  • Energy Reduction & Green Building Services
  • Property Tax Study

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PROPERTY TYPE

RECLASSIFICATION

RESTAURANTS

20% TO 45%

HOTELS

30% TO 50%

SHOPPING MALLS

22% TO 40%

MEDICAL/DENTAL

22% TO 35%

WAREHOUSES

22% TO 40%

AIRPLANE HANGARS

18% TO 35%

GC & COURSES

28% TO 60%

RETAIL FACILITIES

18% TO 35%

THEME PARKS

16% TO 22%

OFFICE BUILDINGS

20% TO 35%

GROCERY STORES

20% TO 45%

APARTMENT BUILDINGS

20% TO 45%

FITNESS CENTERS

22% TO 45%

BANKS

30% TO 47%

MANUFACTURING

30% TO 45%

TV/RADIO/CELL COMPANIES

22% TO 40%

LEASEHOLDS

18% TO 40%

RESEARCH FACILITIES

22% TO 45%

ASSISTED LIVING/RETIREMENT

22% TO 45%

RESORTS

25% TO 45%

WINERIES

18% TO 25%

MIXED USE PROPERTIES

18% TO 30%

ARE YOU LEAVING MONEY ON THE TABLE?


We find that 8 out 10 businesses and commercial property owners are leaving money of the table every year.

CLICK HERE FOR A FREE SAVINGS ANALYSIS