How Much Will It Cost? It depends. We price our studies based on the time and materials involved to complete the project. We take into consideration the building type, size and complexity and then make a fee determination based on our past projects. The only way to know for sure is to provide us with some basic building information and allow us to provide a free, no cost, no obligation initial evaluation and prepare a Cost vs. Benefit analysis that will layout the expected benefits and the flat fee required to complete the study. You can then make an educated decision whether or not to move forward with the study based upon the anticipated return on investment. [Return to Top]
I Purchased My Building 10 Years Ago. Can I Still Benefit From a Cost Segregation Study? If you purchased, constructed, expanded or remodeled your building since 1987, you may be able to benefit from cost segregation. A cost segregation study performed on a property for which a tax return has already been filed is known as a a Look-Back Study. A look back study will properly reclassify all building components and allow you to catch up all attributable depreciation in the current year.
We can conduct a free, no cost, no obligation initial evaluation and prepare a Cost vs. Benefit analysis that will layout the expected benefits and the flat fee required to complete the study. You can then make an educated decision whether or not to move forward with the study based upon the anticipated return on investment. [Return to Top]
In the Event of an Audit or If Any Questions Are Raised by the IRS, Will You Defend Your Findings? Yes. We will defend our findings at no charge to our clients. We will even cover any travel expenses if necessary. [Return to Top]
What is Engineering Based Cost Segregation? The IRS approved method for accelerating building depreciation for Commercial and Residential Rental properties. An Engineering Based Cost Segregation Study will identify items that should be properly classified as tangible personal property or land improvements, rather than real property that is depreciated over 39 years (or 27.5 for Residential Rental). A true “Engineering Based Cost Segregation Study” reconciles all project costs and provides component level detail for both the short AND long lived assets. The tax benefits begin in the first tax year and continue throughout the depreciable life of the identified assets. [Return to Top]
What is the Benefit in My Building? We will conduct a free, no cost, no obligation initial evaluation and prepare a Cost vs. Benefit analysis that will layout the expected benefits and the flat fee required to complete the study. You can then make an educated decision whether or not to move forward with the study based upon the anticipated return on investment. [Return to Top]
What Should I Know Before Choosing a Cost Segregation Provider? After the IRS issued the Cost Segregation Audit Techniques Guide (CSATG) in 2004, and listed Engineering Based Cost Segregation as the preferred method of conducting studies, many Residual Cost Segregation providers began claiming they use Engineering methods.
Currently, there are several cost segregation firms who claim to be providing Engineering Based Cost Segregation, when in reality they are providing their clients with Residual studies. A Residual study is an abbreviated method that simply assigns detailed project costs to the short life assets and then lumps the remaining basis into the 39 year depreciable life classification.
A true Engineering Based Report will have as much detail for the remaining long life assets as it does for the short life assets. This provides the opportunity to retire short and long life assets in the years following the study. It also provides an accurate reconciliation of all project costs and reduces exposure to IRS scrutiny.
Before deciding on a provider, ask to see a sample of their final report, and make sure they are providing a true Engineering Based Study. [Return to Top]
Why Hasn’t My CPA Told Me About This? Most CPA Firms do not have the Engineers on staff to perform Cost Segregation Studies. Cost Segregation is a specialty service requiring extensive knowledge of construction methods, engineering, and the Internal Revenue Code including the applicable Tax Court cases and Revenue Rulings. We work with CPA’s every day to provide the Engineering Resources and Documentation necessary so they can provide this valuable service to their Clients. [Return to Top]
Will a Cost Segregation Study Allow Me to Retire Assets that are Removed or Replaced?
A properly performed Engineering Based Cost Segregation provides a detailed breakdown of the building components and assigns a cost basis to all building components, including the components remaining in the long life 39 year category. This detailed information provides the ability to retire assets that are removed or replaced during the depreciable life of the property. [Return to Top]
Will a Cost Segregation Study Raise Any Red Flags or Increase My Chance of Getting Audited? NO.
A properly performed Engineering Based Cost Segregation will not raise red flags or cause an audit. However, if you are randomly selected for an audit, it is very possible that your Cost Segregation Study will be subject to the audit as well. Therefore it is important to make sure you are using a reputable cost segregation provider that will stand behind their work in any audit situation. Our industry leading studies are designed and packaged to stand on their own. In the case of an Audit or if any questions are raised by the IRS, we will defend our findings at no additional fee. [Return to Top]