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Boost your bottom line with this smart tax strategy.

Cost Segregation Studies

Realize an Average ROI of 54:1.

A cost segregation study separates real property into various depreciable categories, and allows taxpayers to depreciate property over much shorter periods of time than the typical 39-year (or 27.5-year) period. By taking deductions sooner, you lower your current-year tax liability and free up more capital.

The benefits of a cost segregation study include:

  • Substantial accelerated tax deductions
  • Increased cash flow
  • Special depreciation allowances (i.e., Section 179 or bonus depreciation)

Our work is performed in accordance with current tax authority, including the Internal Revenue Code, court decisions, revenue procedures, revenue rulings and Treasury regulations. Our cost segregation specialists apply the standards in the “Cost Segregation Audit Techniques Guide” used by the IRS.

Our Certified Cost Segregation Specialists have the highest level of accreditation in the industry, and we’re one of only 16 firms in the country to employ such experts.

Who Should Consider a Cost Segregation Study?

Any taxpayer could reduce taxes and greatly increase cash flow through a study if:

  • The company is planning to or has recently constructed or purchased a building
  • The company recently renovated an existing building it owns or leases
  • The construction/purchase/renovation price was at least $300,000

Type of Properties that Qualify:

  • Office buildings
  • Retail centers
  • Banks
  • Apartment buildings
  • Manufacturing facilities (heavy or light)
  • Restaurants
  • Hotels/motels
  • Grocery stores
  • Auto dealerships
  • Theaters
  • Golf courses
  • Research and development centers

Tax Reform = Increased Benefits

New Law Adds Bonus Depreciation.

Recent tax reform greatly increased the benefit of cost segregation services. Under the new law, additional depreciation is available for property components that are assigned a depreciation life of 20 years or less. This “bonus depreciation” is now available on both new construction and acquired properties at a rate of 100% (up from a rate of 50% under prior law). This change makes cost segregation even more impactful.

First Year Depreciation graphicFor example, if you buy a commercial property for $1,000,000 (excluding land), the impact of cost segregation is illustrated at the right.*

First year depreciation is more than 25 times greater when applying cost segregation!

These same benefits can apply to remodels, expansions, build-outs, residential rental property, etc. Changes to Section 179 expensing rules also favor taxpayers under the new law — roofs, HVAC systems, fire alarm systems and security systems may be eligible for 100% expensing in the first year!

The bottom line is, our clients who invest in a cost segregation study achieve an average ROI of 54 to 1, and tax reform will only make these benefits greater.

Cost Segregation Infographic:

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