It is important to know what goes into Cost Segregation Studies. Engineering-Based Cost Segregation is the IRS-approved method for accelerating building depreciation for commercial and residential rental properties.
A proper Engineering-Based Cost Segregation study identifies what should be correctly classified as tangible personal property or land improvements rather than real property, depreciated over 39 years (or 27.5 years for residential rental property). This means that all types of investment properties may qualify for a cost segregation study.
Our engineering-based cost segregation studies are far better than the residual studies most other companies perform. See What Makes Us Different!
We go the extra mile for our clients by providing complete detail for both the short-life and long-life building components. This offers multiple benefits:
Suppose you recently purchased or are planning to purchase an existing property. In that case, we can help make your new acquisition more affordable by conducting an Engineering Based Cost Segregation study for the property. This will enable specific building components to be reclassified as tangible personal property or land improvements that can be depreciated over 5, 7, or 15 years rather than real property that is depreciated over 39 years (27.5 years for residential rental property).
Due to the shorter recovery periods and accelerated depreciation methods, items reclassified as tangible personal property and land improvements generate faster depreciation write-offs, thus increasing your cash flow. Our Cost Segregation experts will also assign a depreciable life and a project cost to every component within the property. This will give you the ability to write off short and long-life assets that are retired in the years following the study.
Even if you purchased your property several years ago, you still have the ability to conduct a cost segregation study and receive the benefits of your investment in the current tax year. It can be greatly beneficial if you have owned the property for ten years or less.
An Engineering Based Cost Segregation Study can be incredibly beneficial if you lease your space but have made leasehold improvements of $500,000 or more (or plan to in the future).
M&E Cost Segregation can conduct an initial evaluation based on some basic information and prepare a cost vs. benefit analysis to lay out the expected tax benefits and the fixed fees required to complete the study. Then you can make an educated decision on whether to go forward with the analysis.