Cost Segregation Study Services

Freed Maxick & Battagalia, CPAs, Western New York's largest public accounting firm, has a nationwide Cost Segregation practice where we assist commercial real estate owners in maximizing their depreciation deductions. Freed Maxick also provides outsourced cost segregation services and training to other public accounting firms (CPA firms) across the country.

BOOK RELEASE! Real Estate Cost Segregation: A Practitioner's Guide


Published by Thomson | RIA, the premier provider of advanced research, practice materials, and compliance tools for tax, accounting and corporate finance professionals.

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Authored by Grant Keppel, CPA, Freed Maxick & Battaglia's nationally renown cost segregation practitioner and Director of Cost Segregation Partners. His book, Real Estate Cost Segregation: A Practitioner's Guide puts cost segregation in its larger depreciation context and discusses the legal authorities that support cost segregation for depreciation purposes. 
 
It shows practitioners how to identify projects that are good prospects for cost segregation and, to this end, provides print- outs of sample spreadsheets used to determine whether a cost segregation will be cost-effective. It also discusses what IRS is looking for in a quality cost segregation study and report.

Mr. Keppel walks the reader through the actual execution of a cost segregation study and report as a multi-step process, and as a multi-party process involving the tax practitioner, other experts and the client. He also discusses building a cost segregation practice and other issues related to cost segregation as a business. Order Here

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Services:

If you or your clients have constructed, bought, expanded or remodeled real estate, then they may be able to increase their cash flows by accelerating depreciation-related tax deductions through a Cost Segregation Study.   Let our engineers and appraiser provide value to your clients.

We offer:

• A dedicated staff of engineers
  
• Nationwide strategic alliances
  
• Private Labeling of cost segregation studies
  
• Outsourcing engineering capabilities 
  
• Full technical support
  
• No tax season delays
  
• Uniquely trained tax and engineering professionals experienced in this technical area of taxation and construction approach
  
• Full knowledge of cost segregation-related IRS rulings and court cases.
  
• Experience with IRS audits pertaining to asset allocations
  

What is Cost Segregation?

Cost Segregation is a process to identify personal property assets that often get buried or lumped together within the real property asset.  Freed Maxick & Battaglia’s consultants assist real estate owners nationwide reclassify those asset costs to the shortest possible depreciable life to enable the real estate owner to maximize their tax depreciation deduction, thereby reducing current income tax obligations. If you are undertaking construction, renovation or purchase of a building, you may be eligible for substantial state and federal tax savings.

Certain assets related to the project may qualify for accelerated depreciation, meaning you can take larger tax deductions over a shorter period. The benefits of larger tax deductions include increased cash flow and lower cost of capital in the first few years following a project or purchase.

A cost segregation study, conducted by the qualified professionals at Freed Maxick & Battaglia, CPAs, can help you identify opportunities to claim accelerated depreciation.

Substantial tax savings for your business may lie in the floor beneath your feet, within the walls around you or even in the shrubs outside your building.  But only a cost segregation study, performed by a qualified CPA, can tell you for sure.

What is Cost Segregation for?

A cost segregation study is a strategic analysis that allows companies that have constructed, bought, expanded or remodeled real estate to increase their cash flows by accelerating depreciation-related tax deductions.  To do so, the study identified, segregates and reclassifies property costs currently being depreciated over the typical 39-year depreciable period to shorter depreciable periods of 15, 10 seven or even five years.

This means you can enjoy tax deductions right now that you’d otherwise have to wait years to receive.  So you’ll not only increase the net value of current tax savings, but also boost your cash flow.  

A cost segregation study may be a particularly wise move if you’re:

• Building a new facility
• Acquiring an existing building,
• Improving, renovating or expanding an existing building, or
• Conducting leasehold improvements on your current facility. 

The analysis works most efficiently for new buildings under construction, but it can uncover retroactive deductions for older buildings as well.

Who’s involved with Cost Segregation Studies?

A cost segregation study is not a mere depreciation analysis.  It calls for far more than just classifying line items from construction invoices.  The process requires a team of experts well-versed in accounting regulations and tax laws, as well as engineering and construction principles.  Your CPA will play a starring role, quantifying building components and estimating the costs of those components under IRS guidelines.  The team may also include a contractor, engineer and architect. 

Together, they’ll analyze detailed working drawings, mechanical and electrical plans, and blueprints to segregate the structural, electrical and mechanical components from those linked to personal property.  The study will also allocate “soft costs,” such as architect and engineering fees, to all components.

How Much Can You Save from a Cost Segregation Study?

Property owners often view building components as parts of the entire structure and depreciate everything over 39 years.  But many expenditures fall into categories with much shorter depreciable lives.

For instance, you may be able to define the parking lot as 15-year property, and landscaping and shrubbery for the outside of the building as 10-year property.  You could also classify lighting and plumbing fixtures, as well as carpeting using in a new showroom, as seven-year property.  And don’t forget items such as electrical and ventilation systems, phone lines, computers and furniture, which can be classifiable as five-year property. 

Also, the current Section 179 expensing rules still apply for depreciation if you operate you business as a limited liability company and hold your building in that entity.  And perhaps best of all, the fee for the const segregation study that brings about these savings is generally only 10% to 20% of the resulting cash flow increase. 


Who Benefits from a Cost Segregation Study?

• Apartment Complexes
• Automobile Dealerships
• Distribution Centers
• Fast Food Restaurants 
• Food Processing Facilities 
• Hotels/Motels 
• Manufacturing Plants 
• Medical Centers 
• Nursing Homes 
• Office Buildings 
• Retail Chains 
• Shopping Malls 
• Sports Stadiums 
• Supermarkets

Investment Eligibility

• All post 1986 real estate construction, building, acquisitions or improvements 
• New buildings under construction 
• Existing property constructed anytime, but placed in service after 1986 
• Purchase of existing property 
• Existing buildings undergoing renovation or expansion 
• Office leaseholds improvement and fit outs

Our dedicated Cost Segregation consultants have completed over 1,000 Cost Segregation Studies for clients throughout the United States ranging in size from a $1,000,000 facility to a $200,000,000 facility.

Tax enactments by President Bush in 2002 have amplified the need for Cost Segregation with the right team of qualified engineers, appraisers and CPAs.  As the tax law is unjust with the recovery period on commercial real estate and leasehold improvements to 40 years, it now becomes imperative to review your real estate to shorten the recovery life on assets buried or hidden within the building. 

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Cost Segregation Resources:

Cost Segregation Overview 

Cost Segregation Breakout Process

10 Myths About Cost Segregation Studies

IRS Audit Techniques Guide

Table of Contents
Chapters:

1. Introduction
2. Legal Framework
3. Cost Segregation Methodologies
4. Principal Elements of a Quality Cost Segregation Sudy and Report
5. Review and Examination of a Cost Segregation Study
6. Appendix
   1. Uniform Capitalization
   2. Change in Accounting Method
   3. Depreciation Overview
   4. Relevant Court Cases
   5. Statistical Sampling
   6. Construction Process
   7. Information Document Requests
7. Industry Specific Guidance
   1. Casinos
   2. Restaurants
   3. Retail Industries
   4. Field Directive on Planning and Examination of Cost Segregation Issues in the Biotech/Pharmaceutical Industry

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Cost Segregation Contact:

Send Request for Proposals to:

Freed Maxick & Battaglia, CPAs    Attn: Eric Majchrzak    424 Main Street    Liberty Building, Suite 800    Buffalo, NY 14202    or send via email here

Freed Maxick & Battaglia, CPAs has a national practice providing cost segregation studies to commercial real estate owners.  Additionally, we work with other CPAs across the U.S. to provide cost segregation studies for their clients. No matter where you are located in the U.S., Freed Maxick can assist with your cost segregation needs. 

Grant Keppel, CPA
Director of Cost Segregation Services
Email Grant Keppel

For more information on cost segregation services, click here: Cost Segregation Partners