Cost Segregation Studies

Why Consider a Cost Segregation Study?

A cost segregation study can increase your cash flow by accelerating depreciation-related tax deductions for your real estate if you have constructed, bought, expanded or remodeled that real estate.

In general, if we recommend that you undertake a study, you will increase the net present value of your cash flow by at least 10 times your cost for the study. Our cost segregation professionals will evaluate your project and provide an honest assessment of whether or not a study is worthwhile before any fees are charged. Then we can assist you in evaluating the cost vs. savings before any work begins.

What Is a Cost Segregation Study?

A cost segregation study is a strategic analysis that properly classifies the investment made in real property (a building or facility) between structural and non-structural property. It identifies segregates and reclassifies property costs currently being depreciated over a typical 39-year depreciable period to shorter depreciable periods of between five and 15 years. This process is typically most effective when conducted by a CPA who has specialized training.

What Properties are Eligible?

Consider a cost segregation study if you:

Have new buildings under construction
Own existing buildings undergoing renovation, remodeling, restoration or expansion
Are purchasing existing properties
Are making leasehold improvements
Have made post-1986 real estate construction, acquisitions or improvements where no cost segregation study was performed

Properties with special uses, such as veterinary practices, manufacturing facilities, franchise restaurants and other properties with special wiring, air conditioning and heating, and other specialty systems may be excellent candidates for a cost segregation study.

Who Gets Involved?

This complex process requires a team of experts well-versed in accounting regulations and tax laws, as well as engineering and construction principles. Your cost segregation consultant and CPA will play a key role, quantifying building components and estimating the costs of those components under IRS guidelines. The team analyzes detailed working drawings, mechanical and electrical plans, and blueprints to segregate the structural, electrical and mechanical components from those fundamentally linked to shorter-life personal property. The study will also allocate architectural, legal, engineering, and other fees incurred in the underlying transaction to all components.

To Learn More

We invite you to contact us to learn more about what benefits our cost segregation services strategies can bring to your business.