Cost Segregation
We help real estate and business owners keep more of what they earn.
Reduce Your Income Tax Burden Through Strategic Depreciation
Cost segregation studies accelerate depreciation on your commercial property by identifying and reclassifying building components that qualify for shorter recovery periods. Our engineering-based analysis helps property owners realize significant federal tax savings and increased cash flow by correctly categorizing assets according to IRS guidelines. Within the first five years of building ownership, owners typically save up to $100,000 for every $1 million in building costs.
Accelerated Decpreciation
Reclassify assets from 27.5/39-year depreciation to 5-, 7-, or 15-year schedules for immediate tax savings.
Reduced Tax Liability
Lower your federal income taxes by identifying qualifying property components that can be depreciated faster.
Immediate Cash Flow
Convert future tax deductions into current cash flow that can be reinvested in your business today.
Enhanced ROI
Maximize your property investment returns through tax savings that typically range from $50,000 to $100,000 per million in building costs.
How Does the Cost Segregation Study Process Work?
Preliminary Analysis / Free Property Assessment
We begin with a complimentary analysis of your property to estimate potential tax savings. Our team evaluates your building’s cost basis, in-service date, and property type to determine qualification and projected benefits from a cost segregation study
Engineering Study / Detailed Engineering Analysis
Our engineers perform a comprehensive property review, including an on-site inspection, to identify and reclassify building components that qualify for accelerated depreciation. We analyze over 150 building elements to maximize your tax savings opportunities.
Implementation / Tax Savings Delivered
We provide you and your tax professional with a detailed engineering-based report documenting all reclassified assets and accelerated depreciation opportunities. This allows you to immediately begin reducing your federal tax liability and increasing cash flow.
Actual Cost Savings by Cost Segregation Engineering-Based Studies
STILL NOT SURE?
Frequently Asked Questions
What is the benefit of a cost segregation study?
A Cost Segregation study reduces a building owner’s income taxes up to $100,000 for every $1 mill in building costs. The tax savings are anywhere from 3-10% of the building cost.
What real estate components can typically be accelerated through a cost segregation study?
A cost segregation study can typically accelerate depreciation on many building components, including:Electrical installations (e.g., dedicated computer power, special lighting) Plumbing systems (e.g., kitchen plumbing, bathroom fixtures) HVAC components Flooring (e.g., carpet, vinyl, tile) Window treatments Cabinetry and countertops Decorative finishes and millwork Security systems Fire protection systems Parking lot paving and lighting Landscaping and site improvements Certain building exterior components
When shoud a Cost Segregation study be done?
A study can be completed in the year the building or improvements are placed in service. However, it can also be done on properties acquired or constructed since 1986 without amending prior years’ tax returns.
What information is needed to complete a cost segregation study?
Generally, we request:A current tax depreciation scheduleBuilding cost informationBlueprints or architectural drawings and renovation plans, if applicableAccess to the property for an on-site inspection and walk-through
Will a cost segregation study trigger an audit?
No, a properly conducted cost segregation study has never triggered an audit. In fact, if you are audited for any reason and the study comes into question, CSSI will defend the audit at no cost.
What is a cost segregation study?
A cost segregation study is an engineering-based analysis that reclassifies commercial real estate components and improvements between real and personal property. This reclassification accelerates the depreciable lives from 27.5- or 39-years to 5-, 7-, or 15-years.
Does my property qualify for a cost segregation study?
Your property likely qualifies if:
It’s a commercial building or building improvements with a remaining depreciable basisThe building or improvement cost basis is at least $200,000You anticipate holding the property for at least three years
How long does a cost segregation study take?
A cost segregation study typically takes approximately three to six weeks from the time we receive all the appropriate documentation.
How much can I save with a cost segregation study?
Savings vary, but within the first five years of building ownership, owners could save up to $100,000 for every $1 million in building costs.
Can a cost segregation study be done on buildings not yet constructed?
While a full study can’t be done on unconstructed buildings, CSSI can provide estimates on tax savings from your construction budgets. A full study will be delivered when construction is complete.
