Ultimately, cost segregation is an income tax strategy for owners of commercial real estate. Knowing your provider uses a Detailed Engineering Approach sets your study up for success, but in order to achieve the highest IRS refund, or the lowest income tax due, it is the expertise of the cost segregation tax advisor who will either maximize your savings, or leave a lot of accelerated depreciation unachieved. Worse than that – a poor study creates an environment where IRS audit would be painful. Having a poor quality study is worse, and more expensive than having no study completed at all.

Income Tax Expertise

How do you know if your cost segregation tax advisor is what the IRS Audit Technique Guide (ATG) calls ‘an individual with expertise and experience?’ Download our free guide to providers – asking these questions of a tax advisor will help you discern their knowledge and expertise.

Key elements which indicate an income tax advisor’s expertise with cost segregation:

  • Tours are conducted by 2 professionals:

    • 1 tax law expert, 1 construction and engineering expert.

  • Separate Income Tax Accelerated Depreciation Schedules for Federal and State filing

    • Because the states do not all conform with the federal rules, separate schedules are required for accuracy.

  • Each member of the touring team has several years of experience, full time, providing cost segregation studies

    • Cost segregation is a niche practice area. It is not an area of examination on the CPA exam. For this reason, hours in the field is an important part of learning this specialty. The least experienced person on our leadership team has been conducting cost segregation studies for 12 years. The most experienced has been conducting studies since the 1970s when it was called component depreciation.

  • Tax Advisors do not sell other services (such as investing) based on cost seg savings, or charge a percentage based fee

    • Though not explicitly illegal, the IRS is clear that providers should have no interest in the study results, and that compensation should not be based on study results.

Tax Cuts and Jobs Act (TCJA)

The Tax Cuts and Jobs Act didn’t just adjust how commercial real estate owners can reduce their income taxes, it completely flipped the script, unlike anything seen in tax law in over 30 years.

Great income tax advisors in the area of cost segregation are knowledgeable about all the changes to areas such as:

  • Section 179

  • Bonus Depreciation

  • Qualified Improvement Property

The majority of our clients have seen increased accelerated depreciation, and cost segregation study value, and we’re excited to bring these new income tax savings to future clients.

There is a common assumption that values have decreased due to the adjusted corporate income tax rates. However, in practice, only a handful of commercial real estate owners have experienced decreased value. For most, values are higher than ever before.

 

Cost Segregation Case Studies

 

Contact us today

We are eager to reduce your income tax liability. If you answer yes to the following 4 questions, fill out the form below, or call 518.931.0198.

  •  Do you own commercial real estate (exclusive of land) with a value of $500,000+, or do you own leasehold improvements valued at $225,000+?

  • Have you owned these assets for less than 15 years?

  • Will the owning entities owe income taxes this year, or within 3 years?

  • Do you plan to own the assets for 3 years or more?

 
 
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