How a Cost Segregation Study Can Boost
Tax Savings on Your Office Building
If you have real property with costs of
$400,000 or more, purchased after 1986,
you may be missing an opportunity for
substantial tax savings.
Do you own depreciable
real property?
Are you constructing or purchasing real property?
Are you expanding your existing facility?
If you answer "yes" to any one of these
questions, we can save you money.
First, we will evaluate your property and we will calculate
the tax savings you will realize and we will do that at no
cost to you. You will know the benefits of the service before
you agree to anything. The service I am speaking of is a cost
segregation study. This service offers a unique tax savings
opportunity.
What is a cost segregation study and what is it worth? A cost
segregation study is an analysis, using an engineering approach
acceptable to the Internal Revenue Service, to reclassify costs
from the long depreciation lives of 27, 31 and 39 years to 5,
7 and 15 years. The benefit of a study is the net present value
of tax savings generated as a result of accelerating depreciation
expense. This amount can be significant.
Studies are done not only for property being currently purchased
or constructed or improved, but also for buildings placed in
service as early as 1987. Taxpayers can reclassify costs
that qualified for shorter lives and can "catch-up" those missed
deductions immediately. You don't have to spread
the missed deductions over four years anymore. As you can imagine,
these amounts are usually quite large and result in big tax
savings.
The Internal Revenue Service has made
it clear, through various rulings, procedures
and court cases, that they will not accept anything
less than a cost segregation study using a construction
and an engineering approach. The study is comprehensive
and well documented and in the format acceptable to the
Internal Revenue Service.
Remember that before we do a study, we do an estimate, always
conservative, of the costs that qualify for shorter depreciation
lives and we translate that into the actual tax savings the
client will realize. There are no fees for this estimate
and our fees for an actual study (which are deductible) will
generally be less than the tax savings the first year alone,
not to mention the savings in subsequent years.
At Elliot & Warren, it is our goal
and our commitment to provide exceptional
client service. Cost segregation studies
allow us one additional way to do this by
offering this unique value-added service.
Please call me at (704) 333-8881 if you want
to further discuss our cost segregation service
and the tax benefits to you.
|
