Cost Segregation Services with Source Advisors
For companies that own commercial real estate, multi-family housing or tenant improvements, Cost Segregation services are one of the most significant opportunities available to reduce tax liability and increase short term cash flow.
Request a Cost Segregation Proposal
What is a Cost Segregation Study?
A Cost Segregation study might be thought of as an interest free loan in that it front-loads the depreciation expense deduction a property would otherwise receive over 27.5 or 39 years.
Cost Segregation studies free up capital by accelerating the depreciation of personal property (§ 1245) and Qualified Improvement Property (QIP) as well as identifying various expensing opportunities associated with commercial real estate. The accelerated time frame is typically 5, 7 and 15 years rather than 27.5 or 39 years for the building (§ 1250).
Benefits of Cost Segregation Services
The benefits of a Cost Segregation services are typically measured in terms of:
Increased cash flow generated in earlier years; and the greatest benefit from a Cost Segregation study.
Net present value (NPV) of receiving depreciation expense deductions earlier rather than prorated over the life of the property.
When Should a Cost Segregation Study be Conducted?
The ideal time to have a Cost Segregation service conducted is during the year you are purchasing, remodeling or constructing a commercial property. If you were unable to perform a study when the building was placed-in-service, we might still perform a lookback study which will correct your depreciation schedule going forward and generate a catch up in missed depreciation (§ 481(a) adjustment).
Eligibility of Building or Improvements
Ideal building types include: Apartment complexes, auto dealerships, banks, casinos, distribution centers, grocery stores, health care facilities, hotels, manufacturing facilities, nursing homes, office buildings, restaurants, shopping centers, sports facilities, warehouses, and other specialized property types. Typically, the more complex buildings will generate the greatest benefit from a Cost Segregation study.
The Source Advisors Approach to Cost Segregation
We Don’t Train Our Team on Your Dime
We only hire heavily experienced cost segregation specialists. We believe experience is critical to maximizing the benefits of Cost Segregation, and the majority of our team has spent between 10 and 20+ years managing Cost Segregation projects. Even our least experienced member has conducted more studies than many who manage projects at large firms.
Specialized In-house Dedicated Cost Segregation Team
Our in-house Cost Segregation team is composed of architects, professional engineers, CPAs, MBAs and LEED cost segregation specialists dedicated solely to Cost Segregation. Our management team is involved in every project we’re engaged to perform and often conduct the site visits themselves. And, with rare exceptions, we always conduct a site visit. The IRS expects it, and we believe it is the best way to accurately assess a property.
We Have a National Presence
Our project managers are located in all major markets across the United States.
Audit defense is included in all Cost Segregation studies that we perform.
Fixed Asset Services Provided by Source Advisors
Source Advisors offers several Cost Segregation studies to meet each company’s unique needs and circumstances:
Cost Segregation – Standard Study
Identifies §1245 Property (5, 7, & 15 year property (Typ.))
§1250 Qualified Leasehold Improvements, Qualified Retail Improvements, & Qualified Restaurant Improvements (15 year straight line property).
§1250 Qualified Improvement Property (15 year straight line property and bonus depreciation for §1250 interior improvements after 12/31/2017).
Property eligible for Routine Maintenance Safe Harbors, De Minimis.
Repairs associated with remodeling of existing buildings.
Enhanced Cost Segregation
Our Standard Cost Segregation study that also focuses on prospective tangible property regulations needs
Identifies units of property, building systems, and major components.
Stops short of componentizing the §1250 building components.
The level of detail is highly customizable depending on the type of property as well as the property owner’s tax strategy and future Tangible Property Regulations needs.
Current year study only
A detailed analysis of existing assets removed from service in the current tax year for the purpose of creating a dispositions expense; and
Includes both §1245 and §1250 assets.
Fixed Asset Review
Detailed review of a taxpayer’s depreciation schedule
Fixed asset reviews allows companies to correct past depreciation schedules and maximize depreciation expense deductions, achieving compliance and setting a precedent for managing depreciation schedules going forward. While fixed asset reviews are not a new concept, the opportunities afforded to taxpayers by the Tangible Property Regulations, PATH Act, Tax Cuts and Jobs Act and CARES Act are highly complex and difficult to apply.
A Source Advisors Fixed Asset Review might include one or a combination of the following services:
Cost Segregation opportunities.
Repair opportunities or risks.
§1245 property improperly capitalized or bonus incorrectly applied.
Full Asset Dispositions.
Partial Asset Dispositions.
Opportunities to apply bonus depreciation.
Opportunities to apply for qualified leasehold, restaurant and retail improvements for year placed in service prior to 2018.
Qualified Improvement Property (QIP) for years placed in service after 2015.
Qualified Real Property (QRP) for years placed in service after 2017.
Cost Segregation FAQs
What if my commercial property business is audited by the IRS - Will Source Advisors be available to help me?
How long does a Cost Segregation study take to complete?
What information do I need to provide Source Advisors for an estimate?
The more detailed information you can provide, the better. This ensures a more accurate estimate and we might ask for additional information to clarify our understanding of your particular project and needs. At minimum, we need:
- Capitalized costs for your project.
- Years that it was capitalized in.
- Depreciation schedule, if available.
- Brief description of your business.
- Number of floors, square footage of the building site.
- Property address.