Cost segregation is the process of placing costs associated with a purchased, constructed, renovated or expanded facility into their proper asset depreciation range for federal income tax purposes. For instance, when constructing a new building or undergoing major remodeling, it is imperative that short life property is allocated to the correct life depreciation class instead of falling under a 39-year depreciation schedule along with the building. Performing a cost segregation study is one of the consulting services we perform that will identify assets buried in building costs and assign the shortest possible depreciation life to them, resulting in maximum tax deferrals on the facility.
Our cost segregation services include a thorough investigation necessary to assign proper asset life classifications, ultimately saving you tax dollars. In our cost segregation study, we follow a step-by-step IRS approved cost segregation process that allows us to efficiently determine short life property. While each project is different, our cost segregation studies typically include the following:
- Review of architectural drawings
- On-site facility inspections
- Isolation of shorter class life depreciation
- Detailed asset descriptions
- Documentation of assets qualifying for 3, 5, 7, 10, 15, 20 or 27.5 year life depreciation
- Review of findings with management
- Final report preparation
Careful cost segregation of personal and real property costs result in substantial tax savings. Better yet, these tax savings come when you need them most, the first few years after occupying a new or remodeled facility.
We take pride in the fact that our segregation studies provide our clients with significant tax saving opportunities. By following a proven process, and applying years of tax and cost segregation experience, you will receive value and savings well in excess of our fees. Having worked with a wide variety of clients, including retailers, manufacturers, distributors, restaurants and automobile dealerships, we work hand in hand with you to achieve your goals effectively and efficiently. At Brown Smith Wallace, we make A Measurable Difference™.