COST SEGREGATION

A Cost Segregation study is most beneficial when the property owner has taken the following actions:

· Built a new building;

· Renovated, remodeled, restored or expanded an existing site;

· Purchased an existing property;

· Made facility leasehold improvements.

What additional benefits can I get with Cost Segregation?

In addition to reclassifying the costs of tangible personal property found within commercial real estate, there is the ability to allocate a portion of the indirect costs to the assets segregated and reclassified to shorter depreciable lives. These indirect costs (tangible personal property) generally account for up to 20% of the total construction expense. Studies performed on existing commercial real estate allow for a "catch up" depreciation deduction to be taken in the year the study is performed.
 

Client Example
Office Building with a cost of $5,512,000, placed in service date of October 1999 and study date of June 2003. Additional current year depreciation deduction $509,000 Additional current year cash benefit $178,000 Benefits are for “regular” income tax purposes and are based upon a Federal Income tax rate of 35%.

Does my commercial real estate qualify for a Cost Segregation study?

Ambulatory Surgical Centers	Hospitality	Petrochemical
Auto Dealership	Imaging Centers	Pharmaceuticals
Aviation	Leasehold Improvements	Professional Offices
Communications	Manufacturing	Real Estate Development
Dental Office Buildings	Medical Office Buildings	Restaurants
Food Processing	Mining	Retail
Golf Courses	Multifamily	Transportation
Warehouses

Contact Erick Cutler, Partner, at 214-635-2541.