Cost Segregation |
Cost segregation is a highly beneficial and widely accepted tax planning strategy utilized by commercial real estate owners and tenants to accelerate depreciation deductions, defer tax, and improve cash flow. Once used only by big-4 type accounting firms and the nation’s largest real estate owners, this practice has become routine for commercial property owners of almost every size.
A cost segregation study (CSS) is based on a detailed engineering analysis that is used to support the acceleration of depreciation deductions by identifying costs that can be allocated to shorter recovery periods; primarily 5, 7, and 15-year, as opposed to 27.5 (residential rental) or 39-year (commercial). A quality study provides the documentation needed to defer substantial tax payments and greatly improve cash flow. It is important to note that a cost segregation study does not create new deductions, but increases deductions in the early years of ownership. This front-loading of depreciation allows the taxpayer to take advantage of the time value of money.
Visit our Project Profiles section to view real life examples of the incredible savings.
Benefits
There are a number of benefits associated with cost segregation and its various applications. The primary benefit of course is significantly improved cash flow. This is most often achieved through the acceleration of depreciation deductions and the resulting tax deferral. In addition to the impact of accelerated depreciation, cost segregation may also allow for…
• Reduction of estimated quarterly tax payment
• Property tax savings
• Transfer tax savings
When prepared correctly, a cost segregation study can also be an excellent asset management tool. To learn more about using cost segregation throughout the life cycle of real estate, and the additional benefits that may be available please visit our Applications section.
Today, we are proud to say that Bedford is perhaps the largest cost segregation company in the United States. We have nearly 50 people on staff, dedicated entirely to cost segregation. We have worked very hard to establish ourselves as one of the nation's leading and most respected providers of engineering-based cost segregation services and will continue to do so.
