Cost Segregation
A cost segregation study is an analysis that allows companies and individuals to review all costs associated with the acquisition of a building, or improvements to an existing building. Cost segregation studies create tax deferrals.
The desired result is an increase in company cash flow by accelerating depreciation expense, and deferring federal and state income taxes. These strategies help the business increase its return on investment on the building.
Our cost segregation studies involve the following process:
- A thorough examination of architectural/engineering drawings and specifications to determine assets available for accelerated cost recovery;
- An on-site visit and inspection of the property;
- Discussions with you, your engineer, and other key people about the purpose and function of the property and related equipment;
- Analysis of the capitalized cost, including the general contractor's final application for payment, change orders, architectural fees, owner-incurred costs, and other submitted costs;
- Allocation of indirect costs to project assets;
- Classification of the final project costs; and
- Research applicable tax authority (e.g. court cases and revenue rulings, state sales/use tax law and related cases, etc.).
Maximizing the Financial Benefits:
- Sales/Use Tax Benefits - Many states provide relief for tangible personal property used in manufacturing. Other states have exemptions for property used in research and development. Supporting these incentives is cumbersome, but we make it easy for you to optimize your sales and use tax exemptions.
- Property Tax Relief - In addition to lowering real estate taxes by lowering the cost of the building, there are other excludable costs that we can document that will lower your company's tax base. Specifically, overtime hours, building demolition costs and select change orders may be exempt from a building's tax base in certain jurisdictions. We help you "wring out" excessive property taxes from your facility.
- Other Credits and Incentives - Many states provide special tax credits, incentives or abatements for new construction that we can help you secure.
