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Cost Segregation. Studies in tax savings.
Whatever your real estate assets: new construction, recent acquisition, improvements to an existing structure or leasehold improvements, there are substantial tax benefits that can be gained through Cost Segregation Studies. It’s a way to more accurately measure the depreciation of real property for tax purposes and can even recapture depreciation that’s been “missed” since 1987.
Cost Segregation Studies for CPA firms
Many CPA firms partner with MSC to provide Cost Segregation Studies for their real estate clients. We are fortunate to have worked with more than 300 CPA firms nationwide, both large and small. In every case, we establish and commit to a business relationship based, first and foremost, on trust.
Add value to your client services. Cost segregation is the process of identifying property components that are considered "personal property" or "land improvements" under the federal tax code. Instead of depreciating a building/property over 39 years, or 27.5 for residential rental property, a cost segregation study allows your client to allocate a portion of the property to 5, 7, and 15 years. With bonus depreciation being applicable to all assets with a life of 20 years or less, cost segregation studies become even more valuable.
Cost Segregation Studies for Real Estate Owners
At its most basic, cost segregation is a breakdown of all assets associated with a property—rom paving, sidewalks, and utilities to a building’s components, systems, and finishes. By conducting cost segregation studies, real estate owners and tenants are able to significantly reduce their short-term tax liability.
Cost segregation saves real estate owners money by accelerating depreciation, increasing cash flow, and deferring taxes, by properly classifying your property’s assets. Say you own a building that depreciates over 39 years (or 27.5 for residential rental property), a cost segregation study breaks down the property’s components into what the IRS considers a 5, 7, and 15 year property. This allows the owner to frontload a portion of the depreciation to the current term instead of spreading it out over a longer life.
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