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ATTENTION:
OWNERS, BUYERS, SELLERS, BROKERS, CPAs,
FINANCIAL PLANNERS, BANKERS, & MANAGERS
INVOLVED WITH COMMERCIAL REAL ESTATE!
Anyone interested in obtaining a tax free loan from the IRS? Then read on...
Understanding Cost Segregation
History of USA Cost Segregation Services
Shortly after the landmark decision in the 1997 Hospital Corporation of America (H.C.A) vs. IRS tax case, Jim Shreve was commissioned by a New York City tax attorney, who worked on the H.C.A vs. IRS case to develop the protocols and processes to provide “engineered cost segregation studies” for commercial property owners. Mr. Shreve an engineer and economist understood the financial impact of cost segregation on commercial property owners and developed the application according to IRS tax rules and regulations.
At first the fees for the studies were in excess of $100,000 and were only for properties with at least $10,000,000 in building costs. thereby leaving an enormous market place to be ignored. This market place was commercial property owners who have building costs of $200k-$10Million, and should have the opportunity to the increased cash flow through tax savings created by cost segregation. What developed from this attention to market was the development of an efficient, affordable and compliant engineering method to provide cost segregation studies for commercial and residential properties in the United States. Currently, the consultants have successfully completed over 3,000 studies nationally, and has completed studies of properties ranging from $200k - $180 Million in cost.
What is Cost Segregation?
Cost Segregation is an IRS (Internal Revenue Service) sanctioned application by which commercial property owners can accelerate depreciation and reduce the amount of taxes owed. In many cases, property owners can realize cash flow from tax savings of 7%-10% of building costs within the first five years of ownership. That’s $70k-$100k for each $1Million in building cots. This savings generates cash flow that owners often use to reinvest in the business or purchase more property.
What Types of Properties Qualify?
Real property eligible for cost segregation includes buildings that have been purchased, constructed, expanded or remodeled since 1987. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $500,000. A cost segregation study is most efficient for new buildings recently constructed, but it can also uncover retroactive tax deductions for older buildings which can generate significant short term benefits due to “catch up” depreciation. Building types studied include:
Actual Cost Savings By USA Cost Segregation Engineering Studies
| Facility Type |
Total Property Cost |
First Year Cash Flow from Tax Savings |
Five Year Cash Flow from Saving |
| Office Condo |
$480,000 |
$12, 783 |
$31, 229 |
| Leasehold Improvements |
$1.40 Million |
$53,751 |
$131, 569 |
| Restaurant |
$2.68 Million |
$71,374 |
$173,503 |
| Warehouse |
$6.37 Million |
$108,488 |
$248,559 |
| Medical Facility |
$8.90 Million |
$151,576 |
$347,281 |
| Apartments |
$15.1 Million |
$236,763 |
$570,288 |
| Retail Strip Center |
$22.3 Million |
$379,793 |
$848,160 |
Request a No Cost Preliminary Property Analysis
The USA Closers Difference
Focused
The firm is comprised of engineers singularly focused on cost segregation studies. The goal is to support your CPA or tax advisor with the most accurate cost segregation study results so you can realize maximum savings and increased cash flow
Affordable
Our consultants provides a method that is affordable for your commercial property application
Compliant
The engineering background of the firm allows them to provide not only the best possible results, but also strictly adhere to all IRS guidelines and recommendations. In addition, they stay up to date on the most current IRS cost segregation rules and applications
Independent
Our partner firm is classified as an independent engineering specialist meeting the exact specifications stated by the IRS in regard to commercial property owners applying cost segregation applications.
How Does Cost Segregation Work?
We offer the services of an experienced and qualified engineering company, who performs the cost segregation study on your property. The study accelerates the depreciation of your building/renovation components into shorter depreciation categories such as 5-7, and 15 year rather than conventional 27.5 and 39.5 year schedules. Five and 7-year items might include site utilities, landscaping and paving. This engineered cost segregation study results in much higher depreciation expense and significantly reduced taxable income for the property owner. Best of all, the IRS ruling states cost segregation can be applied to all categories of buildings purchased or built since 1986, including renovations, and there is NO NEED TO AMEND YOUR TAX RETURNS.
Benefits of Cost Segregation
We can all agree that a dollar today is far more valuable than a dollar five years from now. This phenomena is referred to as the Time Value of Money. By capturing those dollars today in the form of accelerated depreciation, it is like getting a tax free check from the IRS. But the benefits don't end there as the immediate impact of having a cost segregation study extends to better banking and expansion realities for your business no matter what the economic realities facing us.
Ignorance Is Not Bliss, It's Expensive
According to the IRS not knowing about the benefits of cost segregation will not excuse you from suffering financial penalties with regard to tax liabilities. Their position is that is your job to learn what tax programs are available to you and not the other way around.
Client Categories
We have helped a wide variety of professionals and/or their clients involved in commercial real estate achieve profitability and increased cash flow. Please visit our solutions page page to learn more about how USA Closers can help you with a client specific application of cost segregation and/or combined service(s).
How to Get Started
To receive your No Cost Preliminary Property Analysis illustrating the estimated tax savings and increased cash flow for your property would create from a cost segregation study, Please complete the short form below
PRELIMINARY PROPERTY ANALYSIS FORM
Nationwide Real Estate & Note Investors
350 Fifth Avenue, 59th Floor, New York, NY 10118
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