Cost Segregation

By: National Cost, Inc.  05/01/2014
Keywords: Cost Segregation

What is Cost Segregation? Whether you are constructing a new building, expanding an existing one, purchasing real estate, rehabilitating an old facility or relocating with leasehold improvements, your property can generate much bigger tax savings than you realize. Substantial tax and cash flow savings can be achieved by taxpayers who properly classify their construction or acquisition costs between real and personal property. A cost segregation study is an engineering-based study of all costs associated with the purchase or construction of a building. The purpose of this study is to classify these costs as either real or personal property, with the personal property additions being depreciated on an accelerated basis. Normally, these costs are assigned a 39-year depreciable life for tax purposes. However, through a cost segregation study, some of these costs may qualify for a 5, 7 or 15-year depreciable life, resulting in a savings of up to 22 cents on every dollar. Assets that have qualified for accelerated depreciation include land improvements, parking lots, fencing, outdoor lighting, landscaping, wall and floor coverings, intercom and security systems, specialized heating, ventilation and cooling systems related to specific business requirements, storage and shelving, movable wall partitions, and many others building assets. An effective, supportable cost segregation analysis requires: • Engineering and valuation skills • A knowledge of construction methods, materials, and costs • A knowledge of income tax regulations, court cases, revenue rulings, and procedures. National Cost is the team of experts you need on your side. Our detailed cost segregation studies pay for themselves many times over, starting with the first year the property is placed in service. By investing in a professionally prepared cost segregation from National Cost you will have the assurance that you have maximized your depreciation benefits. In addition, you will have fully certified documentation for your depreciation claims should you be audited by the IRS.

Keywords: Cost Segregation

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