A cost segregation (or “cost seg”) study is a tax and engineering analysis of real estate holdings that identifies and reclassifies each eligible fixed asset for accelerated depreciation.
Accelerating part of a building’s tax deductions for depreciation based on cost seg studies can generate considerable tax benefits for you. You can expect to save about $150,000 to $200,000 in net present value for each $1 million of assets that our tax and engineering professionals reclassify from a 27.5/39-year depreciable life period to a five-year depreciable life period.
Maximizing your annual deductions for fixed asset depreciation will reduce your taxable income and improve your cash flow in the process.
Madison SPECS has an experienced team of accounting, engineering and tax experts who work exclusively on cost seg studies to ensure that you obtain the greatest tax benefits from your real estate holdings.
Our experienced engineering and tax professionals perform a thorough fixed asset analysis in order to identify all assets that are eligible for accelerated depreciation. This is accomplished through a personal site tour, an expert review of site surveys and blueprints as well as a comprehensive review of all appropriate background records and relevant financial information from your cpa or tax advisors.
Our cost specialists determine the cost of the assets using the most widely accepted sources of construction cost information.
Our tax experts capture the greatest benefits for you and provide full documentation as part of their services based on recommendations from the IRS in its Cost Segregation Audit Technique Guide. Your CPA or tax advisors will find this documentation valuable in the event of an audit.
“A quality cost segregation study is a study that is both accurate and well-documented.
The preparation of cost segregation studies requires knowledge of both the construction process and the tax law involving property classifications for depreciation purposes. Quality studies greatly expedite the Service's review, thereby minimizing audit burden on all parties.”
From the IRS' COST SEGREGATION AUDIT TECHNIQUE GUIDE
Madison SPECS’ cost seg consultants recently went the extra mile for a client, and found a half million dollars worth of net tax benefits hidden in a single fixed asset.
Where? In the company’s refrigerated cooling unit!
Madison SPECS was recently asked to conduct an in-depth cost seg study of a $3.4 million produce facility in Allentown, PA. The consultants were asked to identify assets that could be depreciated on an accelerated basis. The focus was the company’s 35,000 sf processing cooler used to maintain fruits and vegetables at peak freshness. CLICK TO CONTINUE READING
