Cost segregation is a legal tax-saving technique which can result in substantial improvement on your bottom line. New buildings, used buildings, and leasehold improvements represent significant investments. For tax purposes, expenditures for personal property are treated differently from expenditures for real property. To obtain the most tax efficient treatment, costs have to be segregated.
A Cost Segregation study is an engineering-based cost analysis of a new or existing building that identifies and "segregates" personal property components and land improvements from the structural building cost.
Cost Segregation can generate significant cash flow for owners of profitable real estate through accelerated depreciation. In a real estate investment property, most of the business equipment costs are combined with the total project cost, which is depreciated at a life of 27.5 or 39 years.
In many cases, 25% or more of the total project cost could be identified as business components and receive a shorter depreciation life. The result will increase depreciation deductions, increase cash flows, and maximize returns on investment.
Proper segregation of construction costs requires professionals experienced in federal tax, engineering, appraisal, construction estimating and project accounting. Enguard's highly credentialed and highly experienced Cost Segregation team has this experience, which means they have a full understanding of how to maximize the opportunities available to you.
Nearly all non-residential commercial properties acquired, constructed or improved since 2009 can qualify for substantial tax savings and cash flow benefits. Our Cost Segregation Study can produce significant tax savings and cash flow benefits for the following types of properties:
The timing of a Cost Segregation Study depends on the scope of the individual project and the access to the needed information. Generally, a Cost Segregation Study will take four to six weeks to complete.
In most cases, your CPA may not meet the credentials required by the Internal Revenue Service to perform a Cost Segregation Study. However, Enguard's Cost Segregation team will work directly with your CPA to ensure that they are an integral part of your study.
Enguard's goal is to provide a Cost Segregation Study that will reduce your taxable income; therefore our fees are based on the actual tax savings realized by your study.
To determine if and how your company could benefit from a cost segregation study, please contact us and one of Enguard’s tax specialists will then contact you to further discuss this tax-savings opportunity.
