Cost Segregation Services
What is Cost Segregation?
Cost segregation is a tax planning strategy that identifies assets and their costs and classifies them for federal tax purposes. This strategy is utilized by real estate owners to accelerate depreciation deductions and defer tax. Cost segregation can be done at any time even if you have owned a property for years. Other benefits to cost segregation include
- Immediate increase in cash flow
- Reduction in current tax liability
- Deferral of taxes
- Ability to re-claim missed depreciation deductions from prior years
Benefits of Receiving Cost Segregation Services:
At Chandler & Knowles CPAs, our cost segregation consultants are ready to help you identify which property assets qualify for tax savings. After conducting an analysis, our knowledgeable team will provide your company with a detailed report that is compliant with IRS regulations. Among some of the benefits of a detailed real estate property analysis include:
- Tax Savings -- After qualifying components are identified and reported, the depreciation of those assets will help lower the tax amount owed to the IRS. Our tax expert team will help itemize each asset and document new depreciation value in detail. Our methodology ensures that clients receive the maximum tax deductions allowed by IRS regulations.
- Increased Cash Flow -- Our analysis will help improve your cash flow by reducing the money owed to the IRS. This is achieved by allowing real estate owners to preserve their profits, expand operations, and make new investments that help drive you towards success.
- IRS Protection -- Your segregation analysis report is your ultimate shield against the IRS. Our team will ensure that all components of real estate are reported accurately according to IRS regulations.
Cost Segregation Studies
Investors want to know if cost segregation will continue to benefit them. A cost segregation study is based on a detailed engineering-based analysis. The analysis reviews information like cost data, building plans, and lease agreements as well as an on-site property inspection. Following property review, the engineer will write a breakdown of costs and properly allocate them. After the review, architectural and engineering fees, as well as the builder’s overhead and profit, are then designated according to the study’s results. Keep in mind that a quality cost segregation study will mark all depreciable costs, not just those that qualify for a shorter recovery period.
When Should Cost Segregations Happen?
The year the property is placed in service—marking the beginning of the depreciation period. However, a cost segregation study can be done at any time even if you have owned the property for years.
Price of Cost Segregation Study
Prices vary depending on property size, but prices have decreased over the years. For example, a study that would have cost $30,000 or more 10 years ago on a $1 million property will probably price in the $10,000 – $12,000 range in today’s market. The fee, however, should be based on time and materials, not on probability. On average, one can expect a cost segregation study to allocate 20-40% of the depreciable cost basis to a shorter life.
Learn More About Cost Segregation From Our Team
Still unsure if undergoing cost segregation is right for you? No worries! Let the team at Chandler & Knowles help guide you in making the most informed decision that is best for your individual situation. Our team of accounting and tax planning experts can offer you industry knowledge and educate you on all the aspects involved with cost segregation. Contact our team today.