Cost Segregation Studies

Cost segregation is a tax strategy that allows real estate owners to accelerate deprecation deductions by identifying and reclassifying individual building components from long-term depreciable assets (39 years or 27.5 years) to shorter-term depreciable assets (5, 7, or 15 years).

Cost segregation works by accelerating your tax deductions, giving you access to your cash now rather than decades from now.

For example, imagine you purchase a commercial building for $1,000,000.

The standard treatment would be to deduct this $1,000,000 uniformly over 39 years.  Under the standard approach, you can deduct approximately $25,000 each year.

The alternative approach is to use cost segregation to view your $1,000,000 building as a collection of systems rather than one singular building.  We identify and classify non-structural assets such as specialty lighting, carpeting, wiring for dedicated circuits, and more - so that you can write them off over 5, 7, or 15 years instead, as applicable.

So what does this get you?  Instead of a $25,000 deduction each year, we might identify $200,000 or more in assets that can be written off immediately.  This drastically lowers your current tax bill and frees up capital so you can reinvest today.

Phase 1:  Document Review

Our process starts by reviewing and analyzing ALL available documentation for the property.

Detailed cost reports, invoices, BIM models, construction documents, and more are analyzed prior to the next phase of the study.

Phase 2:  Site Visit

Using a robust reality capture process, our engineers will conduct a site visit to collect data about your property.

 This phase allows us to create a model that can be tagged, shared, and measured, increasing the study's defensibility.

Phase 3:  Classify Assets

Site visit notes and reality capture data are analyzed and our models are refined.

This effort allows us to identify and classify the components of your property eligible for accelerated depreciation.

Phase 4:  Report Delivery

Our findings and schedule of assets are incorporated into a detailed engineering cost segregation study report.  

This report is our final deliverable which is shared with your Accountant for tax planning.