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 purchased, 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. If you are looking to create cash flow to re-invest, pay off debt or reduce taxes, cost segregating your commercial property through an engineered based study is a great tax strategy.
WHAT WILL IT COST?
Fees for cost segregation studies can vary considerably between providers. Ultimately three factors determine the cost of a study:
1 - The total cost and scope of the building and/or renovation.
2 - Whether the provider does a complete study (including site survey).
3 - Whether the study receives tax/IRS support.
Identifying all the building components that can be 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 recommended by the IRS). Click Here to get a FREE analysis to see if a Cost Segregation Study is right for you?.
WHAT ARE THE RISKS?
There is no legal or increased audit risk in doing a cost segregation study if done by an experienced firm. 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 which could affect the potential benefits from a study. The building owner risks losing tens and even hundreds of thousands of dollars in cash flow. Click Here to learn why CSR is the right team.
We will defend our report if there were ever an audit and you will receive 40 hours free audit assistance.
The studies conducted by Cost Segregation Results save clients literally hundreds of millions of dollars each year. CSR has completed thousands of engineered based cost segregation studies and will provide as many references as needed to ensure your comfort.
IRS Cost Segregation Audit
Chapter 5: Review and Examination
of a Cost Segregation Study
Bldg Type: Office Building
Bldg Cost: 13.2 Million
Year Acquired: 2003
Increase Cash Flow: $2.100,000
Bldg Type: Hospital
Bldg Cost: 5.6 Million
Year Acquired: 2004
Increase Cash Flow: $1,235,000
Bldg Type: Manufacturer
Bldg Cost: 1.8 Million
Year Acquired: 2001
Increase Cash Flow: $333,000