A cost segregation study allows building components to depreciate at an accelerated rate instead of the traditional 27.5/39 Year Class Life for Real Property.  By reclassifying these components to assets with shorter recovery periods, clients can achieve significant tax savings and improved cash flow.  This tax deferral strategy can be used on new construction, renovations, expansions, existing buildings, new purchases or leasehold improvements. Studies can typically shift 20% to 40% of the building's cost to personal property.

Our firm uses the IRS preferred methodology of an engineering-based approach to all of our cost segregation studies.  We meticulously follow the issued IRS Cost Segregation Audit Techniques Guide.  Our specialists have a well rounded understanding of tax, engineering and construction practices.  Our studies include full component take-offs on ALL property including 27.5/39 Year Property; not just the 5, 7, and 15 Year Property.

While accountants depreciate equipment and other visible costs such as parking lots and carpeting at 5 or 7 or 15 years, The TCSS specialists are able to identify costs that cannot be readily seen; those items behind the walls (ie., wiring, plumbing).

Good candidates for this type of study are properties that:

• Have been purchased, constructed or have been renovated within the past 10 years
• Have a cost basis of at least $500,000
• The owner plans on retaining for the next few years

Benefits of a Cost Segregation Study include:

• Immediate increased cash flow through accelerated depreciation
• Enhancement of real property financial returns
• Correction to misclassified assets
  
• Opportunity to claim missed "catch up depreciation" from prior years in the current year
• Bonus depreciation can be taken in certain cases

COST SEGREGATION