What is Cost Segregation?
Cost Segregation is a widely accepted tax strategy used to accelerate depreciation deductions by identifying certain building components and allocating them to an accelerated depreciation schedule of five, seven, or fifteen years. This method does not create any new deductions, but rather moves deductions forward that might otherwise take 27.5 or 39 years to fully realize. Once performed, the accelerated depreciation schedule and resulting tax deferral greatly improves cash flow – essentially creating an interest–free loan from the government.
Until now, the cost segregation process was too costly to perform on individual rental properties. However, we have teamed up with approved costing estimator, Marshall & Swift, to provide unparalleled accuracy and tax workpapers as required by the Internal Revenue Service.
How it Works
A detailed engineering study, performed by an independent third party, should be used to identify and value these short–life components in conformity with the IRS guidelines. The study must be based on sound cost estimating techniques. Following a site visit and document review, a detailed breakdown of costs and proper allocations is provided for use in preparing the tax returns.
We are ready to assist you with preparing a comprehensive report showing the results of the cost segregation study and then can assist you with tax advice to help you reduce your tax liability. Simply complete the engagement letter for the study and then we will schedule a convenient time to visit the property to take inventory of its components. A complete report will then be prepared and provided to you.