Cost Segregation for Commercial Property Owners

An explanation of Cost Segregation.

COST SEGREGATION STUDIES

A cost segregation study is a federal income tax tool that increases your near term cash flow, in the form of a deferral, by utilizing shorter recovery periods to accelerate the return on capital from your investment in property. Whether newly constructed, purchased or renovated, the components of your building may be properly classified through a cost segregation study into shorter recovery periods for computing depreciation. The study carves out (into 5, 7, and 15 year lives) certain qualifying portions of your building that are normally buried in 39 or 27.5 year categories.

Next-Generation Cost Segregation

Through our next-generation cost segregation studies, we work to uncover potential tax savings and increase cash flow through reclassification and depreciation of property. Our partner Growth Management Group provides a “Detailed Engineering” review as part of our reporting process and works seamlessly with the IRS and your CPA firm for minimal disruption to your business.

The following identifies what Growth Management Group will provide:

  • Free – No Risk Initial Review
  • Evaluate your current tax status and future business plans to determine the applicability of a Cost Segregation Study specifically for your project
  • Evaluate the building’s construction costs by component or systems
  • Review the project’s/facility’s construction documents, including as-built drawings and project specifications
  • If Necessary, visit the facility/project to determine and identify how the components and systems are utilized – as well as to document the systems and components
  • Provide a “Detailed Engineering” review of the assets including special purpose mechanical and electrical systems, decorative finishes, site improvements, and any process related to special purpose construction
  • Classify or reclassify each building component into the appropriate tax life as prescribed by IRS guidelines
  • Identify and allocate indirect costs to each asset
  • Complete a written report with the asset detail supporting the reclassifications and completion of the necessary tax form(s)

COST SEGREGATION STUDIES

  • Qualifying Properties

    Qualifying Properties Usually Follow These Parameters:

    • New Construction
    • Purchase or Acquisition
    • Over $500,000
    • Properties with large amounts of added features, high-end finishes, and components necessary to operate
  • Reclassification Percentages

    PROPERTY TYPE RECLASSIFICATION %
    Apartment Building 20-40%
    Assisted Living Facility 22-45%
    Auto-Car Dealership 29-35%
    Bank 30-45%
    Conference Center 25-35%
    Fitness Center 22-45%
    Golf Course 28-60%
    Grocery Store 20-45%
    Hospital 28-40%
    Hotels 30-50%
    Leasehold Improvements 18-40%
    Manufacturing 30-45%
    Medical Office/Clinic 22-35%
    Mixed Use 18-30%
    Office Building 20-30%
    Research Facility 22-45%
    Resort 25-45%
    Restaurant 20-40%
    Retail Strip Mall 18-30%
    Theme Park 16-22%
    Warehouse 22-40%
    Winery 18-25%

Schedule your Cost Segregation Feasibility Study Now!