A cost segregation study identifies building assets that can be depreciated at an accelerated rate using shorter depreciable lives. These assets may be part of newly constructed buildings or existing buildings that have been purchased or renovated in the past. Faster depreciation translates into significant tax savings and improved cash flows.
Most taxpayers depreciate real property over 39 years. However, using cost segregation, our professional staff will reallocate appropriate assets by 5, 7 or 15 year lives. Several types of construction property can qualify for accelerated depreciation, including: floor coverings, cabinetry, specialty electrical, HVAC equipment and many others.
Our cost segregation studies have saved our clients tax dollars on:
- Office buildings
- Retail store
- Manufacturing plants
- Distribution warehouses
- Auto dealerships
- Medical facilities
- Apartment complexes
- High tech facilities
- Many others
The professionals at Dansa & D’Arata use an engineering approach in performing each individualized study. Our trained consultants identify those assets that can be segregated into shorter depreciable lives by closely following guidelines established by the Internal Revenue Service.
In general, our cost segregation process includes:
- A comprehensive review by our consultants of your construction invoices and building plans to maximize the allocation of 5, 7 and 15 year assets
- An on-site inspection of the building to accumulate additional facts in support of the study, including photos of the exterior and interior of the facility
- Appropriate allocation of all indirect construction costs which are easily overlooked
- A written report supporting our findings and cost allocations
Based on our experience, we can provide an accurate, upfront estimate of the net present value (NPV) of the tax savings from conducting a cost segregation study. Generally, the NPV is ten to twenty times our fees; however, this will vary depending on the property. Our professionals will evaluate your project and provide an honest assessment of whether or not a study is worthwhile before any work is commenced.