SF Invest and Commercial RE


Cost Segregation

Cost Segregation
HUNDREDS OF THOUSANDS in tax savings you would normally wait years to realize can be realized TODAY!   In one sentence, that summarizes what cost segregation does for a property.  Cost segregation uses highly complex engineering methods to achieve the simple objective of pulling cash out of your property.  This is fully endorsed by the IRS.  One needs only to work with your own CPA to ensure it
maximizes your tax benefit

 Definition: (per Wikipedia.com)

Under United States tax laws and accounting rules, cost segregation is the process of identifying personal property assets that are grouped with real property assets, and separating out personal assets for tax reporting purposes. A cost segregation study identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, which reduces current income tax obligations. Personal property assets include a building's non-structural elements, exterior land improvements and indirect construction costs. 

SO any of you out there that own investment property or are looking into investment property for clients need to look into cost segregation and save your clients thousands, which will in turn bring you new business.

If your accountant has not heard of cost segregation - or bifurcation of depreciation - you need to find another accountant!

Comment balloon 5 commentsJames C. Johnson • July 20 2008 02:17PM


James C. Johnson Sioux Falls, SD

cost segregation - or bifurcation of depreciation, is news to me thanks for the heads up!

Posted by Chris Miller Nevada Land with Water Rights, Land with Water Rights For Sale (Vegas Grand Realty and Property Management) almost 11 years ago

You're absolutely right James except for one small aspect.

Cost Segregation is everything you said and more. You're also right about the fact that if you own commercial real estate and your CPA has never heard of it that you need a new CPA.

However, CPA's do not typically have the qualifications to perform a study.  The IRS has clearly stated that in order to have a quality study that stands up to IRS scrutiny the study must be completed by qualified engineering specialists.  

CPA's do not have the expertise so the good ones know to partner with a cost segregation firm and outsource this expertise.

I mention this because that is my business.  I work directly with many CPA's but also many property owners come directly to my firm for these services.

For more info please visit:  www.cpconsultant.com/dfw



Posted by Brad Costanzo almost 11 years ago

In two words, cost segregation is a Tax Benefit.

Accelerated depreciation = increased cash flow.

Additional information can be gleaned from our new website www.madisonspecs.com.

Who Qualifies for a Cost Segregation Study?

 Cost segregation studies are one of the most valuable tax strategies for owners of commercial real estate. You stand to benefit from a cost segregation study if:

 •          You have purchased or constructed commercial real property since 1986

•          You have renovated, expanded or restored an existing property

•          You have installed leasehold improvements in an existing property

•          You are a current income tax payer


A cost segregation study is designed to:

 •          Reclassify real property expenditures

•          Accelerate tax depreciation deductions

•          Recover missed depreciation deductions from prior years

•          Improve cash flow through the reduction of taxable income


Benefits of a Cost Segregation Study to you:

 •          Maximize your annual tax deductions for depreciation

•          Reduce your income tax liability

•          Improve your cash flow

•          Improve shareholder value

 Additional information can be gleaned from our new website www.madisonspecs.com.

Also check here for frequently asked  questions. http://www.activerain.com/blogsview/546155/Frequently-Asked-Questions-About

Posted by Simon Rosenzweig (Real Estate and Marketing) almost 11 years ago

Cost segregation is a definite must for commercial properties, but for residential properties worth less than $1M, the cost often outweighs the benefit. We have a free web tool (DepreciateEm.com) that let's you separate your own assets (like carpet, refrigerator, etc) for residential rentals, and it's a great resource for clients. Try it out and let me know what you think!

Posted by Niman Singh, Property Management Software (SimplifyEm) almost 11 years ago

James - interesting concept!  I'll talk to my accountant when next we meet.


Posted by Dan Hartman (Province Mortgage Associates - NMLS #2861) almost 11 years ago