Which Buildings Qualify
For a Cost Segregation Study?
-- Manufacturing Facilities
-- Distribution Centers
-- Retail Stores and Supermarkets
-- Hotels
-- Restaurants
-- Commercial Office Buildings
-- Medical Facilities -- Banking Facilities -- Movie Theaters -- Auto Dealerships -- Ethanol Facilities -- Nursing Centers -- Apartment Complexes |
What is Cost Segregation?
Your company's real estate holdings constitute a huge capital investment. With an engineering-based cost segregation study, you can enhance your real property's financial return by generating significant cash flow savings.
Most buildings must be depreciated over 39 years for federal tax purposes; equipment and furniture assets may be depreciated over much shorter periods such as five or seven years. A cost segregation analysis identifies specific building related assets that also qualify for shorter federal tax depreciation lives, and the increased cash flow benefits may be significant. We offer assistance to taxpayers in: Reducing federal income taxes in the early years of a building’s life by accelerating federal tax depreciation deductions, resulting in increased current cash flow. Identifying the net present value of the increased cash flow over the life of the facility. - Providing an independent third-party analysis of project costs. Conclusions are based on sound engineering principles and are supported by IRS regulations, rulings and case law.
Who Benefits from Cost Segregation? Most commercial property owners that have tax liability may benefit from such a study. We will work with you to "mine out" these hidden tax savings from: New buildings presently under construction Leasehold Improvements Purchases of existing properties Prior-year construction and acquisitions
Why Choose Stambaugh Ness? We offer an experienced resource for studies of nearly every conceivable type of commercial development during the past 25 years. The capabilities of our experienced engineers is augmented with the expertise of experienced real estate tax professionals who continually stay in step with the changing tax environment. Why is Engineering Expertise so Important? The IRS expects cost segregation studies to be performed by "personnel competent in design, construction and estimating." Invoices and drawings are not always available, so construction cost estimators and engineers are required to properly estimate the construction costs. The team's engineers and contractors have broad experience in civil, electrical, structural, HVAC, industrial, mechanical, environmental and plant engineering and interior design. What Is the Role of CPAs on the Team? Because tax laws constantly change, real estate tax professionals ensure that the positions taken are supported by case law and IRS regulations. CPAs also assist with technical issues that are relevant to a client's unique tax situation including Sec 1031 exchanges, foreign operations and tenants-in-common ownership. What are the Benefits? Increased cash flow benefits* for representative projects are illustrated here: | Project | Increased Cash Flow
(1st Year) | NPV of Increased
Cash Flow |
|---|
Large Retail Center with Grocery Store (New Construction) | $317,000 | $417,000 |
|---|
Multi-Tenant Office Building (Acquisition) | $115,000 | $322,000 |
|---|
Steel Parts Stamping Facility (Prior year project) | $300,000 | $245,000 |
|---|
*These specific results are not guaranteed as each case has its own unique set of factors.
Additional Considerations Include:
Energy Deductions and Credits Site Selection and Incentives | State and Local Tax Implications Accounting Method Changes (From 3115) |
What is Your Proposal Process? Basic drawing and cost information is reviewed, and potential increased cash flow benefits are estimated at no cost. Our fixed fees, based upon time involvement, are generally offset many times over in the first year alone. This is especially true if the property in question was placed in service in a prior year - and prior year returns do not have to be amended. They are corrected with the filing of Form 3115, Application for Change in Accounting Method. For More Information To learn more about the benefits of an engineering-based cost segregation study, contact Scott Hursh at 717-757-6999 or 800-745-8233 or use the email form below.
| Are you getting all of the timely and useful information you need? Sign up now for our weekly eNewsletter. |
Tax Services Stambaugh Ness Services |