PROPERTY OWNERS

All of our clients ask the same three questions.

      #1.  Will it benefit me?
      #2.  What will it cost?
      #3.  What are the risks?

Will It Benefit Me?
If you owe or are are paying income tax and have a commercial building that you bought, built or renovated after 1986, a cost segregation study can expedite tax deductions through accelerated depreciation benefits.  The short answer is YES.  A building owner of a million-dollar commercial building will realize an extra $100,000 in cash flow by having a cost segregation study done. In most cases, between 25% and 50% of the value of a qualified building can be accelerated from a 27.5 or 39-year straight line depreciation schedule to a 5-year depreciation schedule.

What Will It Cost?
Fees for cost segregation studies can vary considerably between providers (as well as tax benefits), as can the quality. Ultimately four factors determine a study’s value:

• The total cost of the building and/or renovation.
• Whether the provider does a complete study (including site survey).
• Whether the study receives tax/IRS support.

Identifying all the building components that can justifiably accelerated requires specialized construction and engineering expertise and an in-depth knowledge of the tax laws. Before engaging a study, an owner should get a preliminary analysis. IRS guidelines state that “a cost segregation study from a construction engineer is more reliable than one conducted by someone with no engineering or construction background.” If you are going through your accountant, ask if they plan to use a third party engineering firm (Highly suggested by the IRS).

What Are The Risks?
There is no legal or increased audit risk to doing a cost segregation study. Cost segregation is an established procedure in which the IRS has written guidelines.

The only true risk is having your Cost Segregation Engineering study done by someone with limited knowledge and experience.  A limited knowledge or experience causes the building owner to receive lesser tax benefit.  This could cause the building owner to lose tens and even hundreds of thousands of dollars in cash flow.

Bottom Line
The studies conducted by Cost Segregation Services save clients literally hundreds of millions of dollars each year.  CSR has completed thousands of engineered cost segregation studies and will provide as many references as needed to ensure your comfort.