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Cost Segregation

Classify Assets to Manage Tax Liability

Our CPAs provide systematic and comprehensive analysis of all costs associated with the construction or purchase of a new building, rehabilitation of an existing facility or relocation with leasehold improvements. Using standard engineering and cost estimating methodologies, we maximize available depreciation benefits and improve returns by reducing federal income taxes, increase after-tax cash flow and debt serviceability.

  • Know Before Choosing an Approach

    • The magnitude and diversity of your real estate portfolio
    • Your tax goals and strategies
    • Existing tax issues that may be depreciating your investments
  • Complete Analysis Approach

    This is a standard procedure for single facilities placed in service, but can be performed on larger portfolios.
    Maximizes both tax benefits and document supportability by analyzing:

    • Comprehensive general contractor costs, architect and engineering fees
    • Additional owner-incurred costs
    • Construction drawings
  • Sample Approach

    This procedure addresses larger portfolios of semi-standard investments, such as restaurant chains, hotels and retail facilities. By identifying and assuming similarities between locations, in-depth analysis of a smaller, representative portion is possible. These include:

    • Building footprints
    • Fixture orientations
    • Facility processes

    The cost of similar process-related systems is directly proportional to project construction cost, enabling the sample set analysis to be extrapolated for the remainder of the properties.

  • Modified Sample Approach

    This is a thorough examination of all construction costs and available documentation relating to a sample set of similarly constructed facilities. Software is used to allow for expansion and compression of line item costs and estimates per facility and individual contract. Construction cost estimates are generated from the sample set and are assigned variance factors as determined by:

    • Total construction cost
    • Facility construction location
    • Placed-in-service date
    • Quantity take-offs

    The assumption basis is identical to the Sample Approach and is used to extrapolate the results for the remainder of the properties.

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