The Value of an Engineered Based Cost Segregation Study


Would you Rather Get Your Money Back Today or in 39 Years?

We are all too familiar with sayings like “I will do it tomorrow.” “I’ll do it later.” “I have better things to do.” More than likely, it drives you a little nuts when your kids or spouse say they will vacuum or mow the lawn tomorrow. That mentality is an open door for missed opportunities and when it comes to finances…they can lead to costly mistakes. As a CPA you are your clients’ trusted advisor and hold the key to ensuring opportunities are not lost. However, too often they are overlooked for property owners who miss significant opportunities for additional write-offs and reduced tax liability.

Cost Segregation – Now vs. Later

In addition to providing lower taxes, a cost segregation study now can benefit property owners in a number of ways:

  • Value of the dollar: It is not the dollar amount that is important but the value of that dollar today. The value of the dollar changes every year, especially in today’s shaky economy. As the American debt ceiling continues to rise, the value of the dollar continues to drop. A cost segregation study will ensure the American dollar doesn’t depreciate alongside all of your assets. Inflation Calculator
  • Shorter Class Lives: By separating personal property in a building from real property, not only is there a reduction in property tax but annual depreciation also increases. This allows for larger financial opportunities in those early stages of a properties life by releasing cash for investment opportunities or operating needs.
  • Documentation: It is important to properly document cost and asset reclassifications to resolve IRS audit inquiries quickly.
  • Retroactivity: Taxpayers can take the entire amount of the adjustment in the year the cost segregation study is completed to increase cash flow in the current year.
  • Reduced Insurance Costs: With a properly classified building, an insurance provider can better evaluate the replacement value of the property to better calculate insurance premiums.

A cost segregation study can also reduce real estate tax liabilities and identify certain sales and use tax savings opportunities.

Items to be reclassified:

  • Site Improvements (landscaping/parking)
  • Light Fixtures
  • Branch wiring
  • Special Plumbing
  • Flooring
  • Millwork
  • Millwork Window Coverings
  • Partition Walls
  • Cabinetry
  • Furnishings
  • Shelving
  • Wall Coverings

Engineered Tax Services has the expertise to identify every opportunity for your clients. We provide detailed reports, clean up existing depreciations schedules and create a valuable tool for accelerated depreciation, disposition of assets, additional write-off’s via new tangible property rulings, and missed energy incentives that will generate 100’s of thousands of dollars for your clients.

These reports are backed by our audit-defense program and ensure limited liability while providing the documentation and detail necessary to stand-up under IRS review. Call ETS today for a free benefit estimate for you or your clients at 800-236-6519 or email us here.

by Elaine Connolly


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