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ADVANCED STRATEGIES AND FAQs
Link to General Information
Link to Free Estimate Application
ADVANCED STRATEGIES
1. Many investors look for properties which can be upgraded to increase rents and therefore the value of the property. Make sure to have a Cost Segregation Study done BEFORE the renovation to write off existing assets. For example, kitchen counter tops are five-year property. If you are planning to renovate an apartment complex, you would want to write off the existing kitchen countertops first, and then have a second Cost Segregation Study to write off the new kitchen countertops. If there was not a study conducted prior to the renovation, only the new kitchen countertops would be deductible. This only applies to high dollar renovations; if the renovation is less than $500,000 ask your tax preparer about Section 179 tax write offs.
2. Many property investors syndicate the purchase of a property. With the proper ownership structure, e.g., a partnership, the depreciation can be assigned to the investors, which will greatly increase their ROI and therefore their likelihood of investing.
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FREQUENTLY ASKED QUESTIONS
How much does a Cost Segregation Study cost?
This is much like asking “how much is a car?”
There are multiple variables that come into play because commercial properties come in all shapes and sizes. The fee for most single properties will range between $10,000 - $30,000. Qualifying taxpayers can expect at least a 10 to 1 return, or more, for every $1 invested in having a Cost Segregation Study done. CBRE guarantees a 10 to 1 minimum benefit to cost ratio.
Can my CPA do a Cost Segregation Study for me?
A proper Cost Segregation Study is a complex combination of tax law and engineering principles. Most accounting firms do not specialize in this area. If they do a cost segregation study, it is known as “desktop” study and will NOT get you all you are entitled. One of URB's customers, Scott Gunderson, who owns an Audi dealership in Mission Viejo, CA, had a desktop study performed. After the desktop study, URB did an engineered Cost Segregation Study and Mr. Gunderson received an additional $600,000 tax refund!
Our approach is engineer based...yielding the greatest tax benefits available to you. A completed Cost Segregation Study does not replace the important role an accountant plays in preparing tax documentation or determining tax liability.
What types of commercial properties qualify?
Cost Segregation Studies can benefit owners of: Agriculture Properties, Amusement Parks, Apartment Complexes, Assisted Living Facilities, Auto Dealerships, Banks, Casinos, Car Washes, Day Care Centers, Dental Offices, Dispensaries, Fitness Centers, Gas Stations, Grocery Stores, Golf Courses, Greenhouses, Hospitals, Hotels/Motels, Medical Facilities, Mobile Home Parks, Office Buildings, Office Suites, Self-Storage Facilities, Restaurants, Retail Centers, Warehouses, and many, many more types of property.
Can I “catch up” on past depreciation I should have taken?
Yes, catch up depreciation is the difference in the depreciation you have taken and the depreciation you could have taken if you had a Cost Segregation Study done in the year of purchase. You have a choice of either amending the previous years’ tax returns and receiving a tax refund or you can take the extra depreciation you were entitled to in prior years and writing off in the year of the Cost Segregation Study.
What about renovations?
A significant portion of the cost of renovations will typically fall into reclassified depreciation categories so even if you have already done a Cost Segregation Study, you should consider doing another one for renovations if the cost of renovations was over $500,000. If the renovations are less than $500,000, ask your tax preparer about Section 179 deductions.
Can a Cost Segregation Study be used to lower realty transfer taxes and/or property taxes?
It may since the purchase price will be segregated into real property and personal property. Realty transfer taxes and property taxes typically apply to real property only; ask your tax preparer and provide the specific details on your property.
Why isn’t every property owner utilizing Cost Seg?
Taxpayers who already know about Cost Segregation Studies are effectively utilizing them to defer tax payments and save massive amounts of cash! Unfortunately, many more thousands of commercial property owners are simply unaware of this tax strategy...but it is not their fault. The tax code is very complex, and they simply don’t know. If you don’t do a Cost Segregation Study, you are simply giving the IRS a tax-free loan until you write off the depreciation over the straight-line periods of either 27.5 or 39 years.
Now that you know about Cost Segregation, what will you do?
I’m ready! I want to see the savings on my property.
Congratulations! This is the first step to determining how advantageous a Cost Segregation Study can be for you.
The second step is to fill out the attached questionnaire and send it to us. We will do a FREE Preliminary Analysis which will include the cost of the Cost Segregation Study and the range of expected savings.
The third step is to sign the contract to do the Cost Segregation Study and pay for it. The study typically takes three to six weeks to complete, though timing can vary since one of the requirements for an IRS approved Cost Segregation Study is a site visit.
Link to General Information
Link to Free Estimate Application
ADVANCED STRATEGIES
1. Many investors look for properties which can be upgraded to increase rents and therefore the value of the property. Make sure to have a Cost Segregation Study done BEFORE the renovation to write off existing assets. For example, kitchen counter tops are five-year property. If you are planning to renovate an apartment complex, you would want to write off the existing kitchen countertops first, and then have a second Cost Segregation Study to write off the new kitchen countertops. If there was not a study conducted prior to the renovation, only the new kitchen countertops would be deductible. This only applies to high dollar renovations; if the renovation is less than $500,000 ask your tax preparer about Section 179 tax write offs.
2. Many property investors syndicate the purchase of a property. With the proper ownership structure, e.g., a partnership, the depreciation can be assigned to the investors, which will greatly increase their ROI and therefore their likelihood of investing.
-----
FREQUENTLY ASKED QUESTIONS
How much does a Cost Segregation Study cost?
This is much like asking “how much is a car?”
There are multiple variables that come into play because commercial properties come in all shapes and sizes. The fee for most single properties will range between $10,000 - $30,000. Qualifying taxpayers can expect at least a 10 to 1 return, or more, for every $1 invested in having a Cost Segregation Study done. CBRE guarantees a 10 to 1 minimum benefit to cost ratio.
Can my CPA do a Cost Segregation Study for me?
A proper Cost Segregation Study is a complex combination of tax law and engineering principles. Most accounting firms do not specialize in this area. If they do a cost segregation study, it is known as “desktop” study and will NOT get you all you are entitled. One of URB's customers, Scott Gunderson, who owns an Audi dealership in Mission Viejo, CA, had a desktop study performed. After the desktop study, URB did an engineered Cost Segregation Study and Mr. Gunderson received an additional $600,000 tax refund!
Our approach is engineer based...yielding the greatest tax benefits available to you. A completed Cost Segregation Study does not replace the important role an accountant plays in preparing tax documentation or determining tax liability.
What types of commercial properties qualify?
Cost Segregation Studies can benefit owners of: Agriculture Properties, Amusement Parks, Apartment Complexes, Assisted Living Facilities, Auto Dealerships, Banks, Casinos, Car Washes, Day Care Centers, Dental Offices, Dispensaries, Fitness Centers, Gas Stations, Grocery Stores, Golf Courses, Greenhouses, Hospitals, Hotels/Motels, Medical Facilities, Mobile Home Parks, Office Buildings, Office Suites, Self-Storage Facilities, Restaurants, Retail Centers, Warehouses, and many, many more types of property.
Can I “catch up” on past depreciation I should have taken?
Yes, catch up depreciation is the difference in the depreciation you have taken and the depreciation you could have taken if you had a Cost Segregation Study done in the year of purchase. You have a choice of either amending the previous years’ tax returns and receiving a tax refund or you can take the extra depreciation you were entitled to in prior years and writing off in the year of the Cost Segregation Study.
What about renovations?
A significant portion of the cost of renovations will typically fall into reclassified depreciation categories so even if you have already done a Cost Segregation Study, you should consider doing another one for renovations if the cost of renovations was over $500,000. If the renovations are less than $500,000, ask your tax preparer about Section 179 deductions.
Can a Cost Segregation Study be used to lower realty transfer taxes and/or property taxes?
It may since the purchase price will be segregated into real property and personal property. Realty transfer taxes and property taxes typically apply to real property only; ask your tax preparer and provide the specific details on your property.
Why isn’t every property owner utilizing Cost Seg?
Taxpayers who already know about Cost Segregation Studies are effectively utilizing them to defer tax payments and save massive amounts of cash! Unfortunately, many more thousands of commercial property owners are simply unaware of this tax strategy...but it is not their fault. The tax code is very complex, and they simply don’t know. If you don’t do a Cost Segregation Study, you are simply giving the IRS a tax-free loan until you write off the depreciation over the straight-line periods of either 27.5 or 39 years.
Now that you know about Cost Segregation, what will you do?
I’m ready! I want to see the savings on my property.
Congratulations! This is the first step to determining how advantageous a Cost Segregation Study can be for you.
The second step is to fill out the attached questionnaire and send it to us. We will do a FREE Preliminary Analysis which will include the cost of the Cost Segregation Study and the range of expected savings.
The third step is to sign the contract to do the Cost Segregation Study and pay for it. The study typically takes three to six weeks to complete, though timing can vary since one of the requirements for an IRS approved Cost Segregation Study is a site visit.
