Cost segregation

Finding new ways to reduce tax liabilities and enhance cash flow is a top priority for every company. However, it’s quite rare when there is an opportunity to have a deep impact on tax liability. The good news for Georgia companies is if you have recently started construction on, purchased, or made leasehold improvements to commercial real estate, then you may be able to achieve such a tax savings. Through a cost segregation study, real estate owners are able to accelerate depreciation on certain building assets and receive a compelling tax benefit. While the rules and regulations governing these studies can be very complex, our team of seasoned professionals will guide you through the process.

A cost segregation study identifies the assets and costs of your commercial real estate or construction project and classifies them for federal tax purposes. Most will classify assets (electrical, mechanical, HVAC, and plumbing features) on a 39-year depreciable life schedule providing a consistent tax benefit. However, through a cost segregation study these same assets are reclassified with a 5, 7 or 15 year depreciable life schedule using accelerated methods. The result is a reduction in taxes, cash flow increase and the opportunity to leverage missed deduction opportunities (without filing an amended tax return).

Only certain entities are eligible to conduct cost segregation studies including pass-through entities such as S-Corps, LLCs. Partnerships, C-Corps and Real Estate Investment Trusts. In addition, only companies engaged in the construction or commercial real estate, have recently purchased new property, interested in assessing existing commercial property, undergoing renovations or expansions or recently completed leasehold improvements are eligible.