Cost Segregation

If you believe that a dollar today is worth more than a dollar tomorrow, then naturally a tax deduction today is worth more than a tax deduction tomorrow too. Accelerating the depreciation on your building through a cost segregation study provides you with your tax deduction today. Consider cost segregation an interest-free loan for the life of your building. If you want to maximize your cash-flow, then ask for a FREE Feasibility Study of your property and Complimentary Consultation to see if a Cost Segregation Study is Cost Effective for you. By ignoring generous IRS guidelines when establishing depreciation schedules, over 90% of real estate investors are unintentionally overpaying federal income taxes.

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What is Cost Segregation?

Cost Segregation improves cash-flow and the bottom-line for building owners.
Cost Segregation Studies (CSS) have become an increasingly valuable but not commonly understood tax strategy that should be considered by virtually every taxpayer who owns, is constructing, renovating or acquiring commercial or investment property.

Cost Segregation is an engineering-based approach to identifying assets within a building that can be reclassified into a much shorter depreciation class than the building itself. Real estate properties (and everything in them) are generally depreciated using a straight-line method over 39-years (27.5-years for residential properties). These properties are defined as real property.

Engineered Tax Services (ETS) can maximize your inherent tax benefit by identifying, classifying, and segregating the personal property components of the building, resulting in depreciable lives of 5, 7 and 15 years using accelerated depreciation.

Who can benefit from Cost Segregation?
To determine if a cost segregation analysis is appropriate for you, ask yourself the following questions:
1) Is the cost of your building (land excluded) at least $800,000?
2) Have you purchased, constructed or renovated any property in the past 12 years?
3) Have you paid taxes, either personally or with your corporation in the last 6 years? (since 2003)
Cost segregation is a valuable service if you can answer "yes" to these questions.

YES, Now Show Me the Money

What are the Benefits?

1. Significant Tax Savings Through Accelerated Tax Deductions
2. Provides IMMEDIATE increased Cash Flow
3. Repair, remodeling, renovations, and replacements will be less costly due to detailed breakdown of building components
4. Reclassifies assets correctly which now gives you the opportunity to claim "catch-up" in the current year. This could be a VERY LARGE deduction
5. Demolition and rehabilitation allows property owner to write-off certain assets as opposed to capitalizing those assets for the remainder of the 39 years
6. Expect a substantial Return-on-Investment, typically at least 15 to 1
7. Brings together engineering, construction and accounting systems.
8. For buildings you propose to construct, a Cost Seg Study could reduce the actual cost per square foot.
9. Commercial Property owners can generally expect to accelerate depreciation on 20-40% of Total Building
10. Possible lower property insurance rates
11. Possible Reduced Real Estate Property Taxes
12. Enhance your real property's financial returns
13. Increase Opportunities
14. ****Provides an independent, objective, third party report that will withstand IRS scrutiny****

How much can be saved?

The average net present value of additional cash flow is $34,000 for every $100,000 of 39-year property that is reclassified. Typically between 15-40% of a building's overall costs can be reclassified to one of the shorter cost recovery periods.
The actual amount of present-value savings depends on the type of property and its specific construction components.

CAN YOU GET IMMEDIATE CASH BENEFITS?

Who can perform a cost segregation study?

The IRS requires that a CSS be "performed by 'qualified' individuals or firms, such as those employing personnel competent in design, construction, auditing, and estimating procedures relating to building construction." Our team approach of using licensed engineers, CPA’s and accountants, will result in a study that maximizes the tax benefits of the study, while exceeding the IRS regulations and guidelines.

IRS supports cost segregation

Although cost segregation has a long history, the basis for today's studies were established by a US Tax Court decision in 1997. IRS guidelines for cost segregation studies recommend an engineered approach coupled with the tax accounting expertise needed regarding federal taxes and depreciable lives.

In the past years, the IRS has continued to validate, uphold and improve the value of cost segregation studies by enacting the 2002 and 2003 Tax Acts.

For those that should conduct a retroactive study, the IRS now allows the benefits to be recognized in one year, rather than over four years – without filing an amended return or without IRS approval.

The IRS has recently published Revenue Procedure 2004-11 which verifies that the taxpayer does not need to obtain approval or file amended returns to perform a retroactive CSS.

Which Building Types Qualify?

Properties with the highest savings potential include:

How do I get started?

Ask yourself the following questions when deciding whether you can benefit from a cost segregation study:
1. Do you pay federal income taxes?
2. Do you own investment real estate?
3. Can you use additional tax deductions
4. Could you use more MONEY in your pocket today as opposed to 39 years from now?

Lets Get Started

Engineered Tax Services will provide a feasibility study to see if the cost segregation study will be cost effective.

There is no charge for this study and this enables the building owner to objectively evaluate potential benefits. If it is not going to return a GREAT ROI to you, we will walk away with no cost or commitment from you. That is how confident we are that it will put money in your bottom line today with little effort from you!

Do not assume that your CPA has performed a cost segregation study in conjunction with the filing of your annual tax returns or that it's too late to file one for your existing building.

Why should your company pay any more in federal and state taxes than it absolutely has to? Well, we believe that is nobody's business but YOURS.

Don't delay!

GET STARTED TODAY:

For your FREE property evaluation and consultation:

Matt Lister

Tele: 239-253-0793

Email: mlister@engineeredtaxservices.com

"Cost segregation studies are a lucrative tax strategy that should be used in almost every major purchase of commercial real estate."

US Treasury Dept