What is "cost segregation" and why should I know about it? Cost segregation or Modified Accelerated Cost Recovery System (MACRS) as the IRS refers to it, is the process of identifying and reclassifying the various building components of your commercial property, leasehold improvements, and rental houses to shorter depreciation periods, thus reducing current tax obligations. Think about it - it's called accelerated cost recovery - doesn't that sound like something you'd want to know about? Of course it does! This recent change in the tax code came about from a Supreme Court decision against the IRS, and even now, less than five percent of qualifying property owners take advantage of this "loophole." A properly performed forensic cost segregation study, however, can cost you tens of thousands of dollars, and it's not something your CPA can readily do for you. At Tax Saving Studies, we provide a budget-conscious economical way for practically every commercial property owner to benefit from cost segregation - even properties costing less than $50,000. How large a tax refund or credit you can receive depends on several factors, but credits into the tens of thousands of dollars are common! That's money you could be putting to good use today!
You can read more about cost segregation on the IRS web site here.
At Tax Saving Studies, we provide you with a verifiable third-party report produced using our proprietary "rule-of-thumb" computer modeling crafted from actual results of thousands of on-site forensic studies and reviewed by one of our architects or engineers. This saves enormous time and costs and we pass these savings on to you. We also utilize exclusively in-house and online sales and marketing and do not have a commissioned sales force. When you do business with other cost segregation companies, as much as half of your fees go to pay sales commissions! We also rely upon you to provide us with appropriate documentation and digital photographs of your commercial property so that we can identify any specific components that may be unique or unusual. This documentation generally will take less than an hour of your time and save you thousands of dollars.This is the same process utilized by many cost segregation firms that charge thousands of dollars more for a less accurate study.
We are so confident we can beat any competitor's pricing, we guarantee that we will be at least ten percent less!
IRS guidelines state that a cost segregation study must be conducted by one skilled in the construction industry, specifically, an engineer or architect. Studies based upon guesses by an accountant - even "good" guesses - will expose you to audit, penalties, interest, and possible criminal charges. You don't want this, and your accountant shouldn't either. Further, the IRS prefers an "arms-length" between your CPA and your cost segregation firm, meaning that they should not be one in the same. This helps eliminate obvious potential conflicts of interest that you also want to avoid.
For an optional additional fee, we will also prepare your IRS Form 3115 for submission by you or your accountant.
There is never a "bad" time to perform a cost segregation study - the sooner you do, the sooner you'll begin realizing your tax benefits, typically within 90 days or less. Because we have streamlined the process of producing your study, we can usually provide you with everything you need much faster than a full forensic on-site study - typically within a few days of receiving your information!