COST SEGREGATION

Request a no-cost projected benefit analysis of a cost segregation study.

What Is A Cost Segregation Study?

The Cost Segregation Study allows corporations and investors to reduce their taxable income through accelerated depreciation on their real estate holdings, resulting in increased after-tax cash flows.

If you have built, acquired, or renovated a commercial, industrial, or residential facility over the last 15 years, and have not performed a cost segregation study, it is more than likely you are paying too much federal income tax.

The Concorde Group works with real estate owners and their CPA's, in all fifty states, to increase cash flow from constructed buildings, purchased properties, and building renovations by accelerating depreciation expense deductions.

We follow the preferred IRS method, using an engineered approach, to segregate your facility’s components into shorter live assets resulting in significant tax savings.

Clients that can use Cost Segregation:

• Entities with 39-year asests, typically $750,000 or more
• Real estate owners that have acquired new property within the last 15 years
• Real estate owners that have constructed an addition or renovations to an existing facility
• Automobile dealerships and service centers
• Accounting firms
• Apartment buildings
• Banks and financial institutions
• Day care centers
• Distribution and warehouse facilities
• Engineering and R&D
• Energy, Utilities and Mining
• Entertainment and Media
• Fitness centers
• Golf courses
• Hotels and Resorts
• Long-term health care and Assisted living
• Manufacturing/ Industrial
• Medical office buildings
• Office buildings and leased space
• Retail – shopping centers/ department stores
• Restaurants

The Process:

1. Obtain closing statement, facility blue-prints, construction data, current rent roll, or appraisal if applicable.
2. Determine final costs to be depreciated (excluding land).
3. Provide the client with a conservative estimate of Tax Savings as a result of the study in a detailed presentation.
4. Establish a firm price engagement fee – not contingent on our results.
5. Establish a project time line with you and your CPA.
6. Meet with a facilities manager or representative to perform a thorough review and site visit of the subject properties.
7. Properly document the distribution of building components per the IRS regulations and court rulings.
8. Conduct a close-out meeting to explain and deliver the final report.

Myths and Realities about Cost Segregation

Myth: My accountant already makes sure I get all allowable depreciation.

Reality: As we all know, IRS rules and regulations are extremely complex. Cost segregation involves not only specialized tax law knowledge,

but construction engineering expertise such as the ability to read blueprints and building specifications.  Even if your accountant understands

the basics of cost segregation, performing cost segregation without engineering or construction expertise along with a deep understanding of t

he relevant tax law changes, IRS Private Letter Rulings, and court cases, valuable tax benefits will certainly be missed. IRS cost

segregation audit guidelines clearly state that “a study by a construction engineer is more reliable than one conducted by someone with no

engineering or construction background.”  In contrast, an accountant’s ad-hoc cost segregation calculation or reliance on a contractor

(who typically is familiar neither with a subcontractor’s cost for specific property items nor the tax law) is a recipe for disaster on examination.

Myth: A cost segregation study is an inconvenience and costs too much money.

Reality: In the early days of cost segregation this might have been true, especially for owners of smaller commercial buildings. However, The Concorde

Group is proven to be priced competitively, sometimes 40% to 50% less than large CPA firms. Our experience and methodology have brought costs

within reach of the vast majority of commercial property owners. Further, the time and effort involved on the part of building owners or managers is

minimal. Our process is seamless to your organization. And the savings can be substantial for any owner who pays federal income taxes.

Typically 5% to 10% of the real estate investment cost.

Myth: It’s too late to change the depreciation on our building.

Reality: Many owners and their accountants think that once they have established an accounting method they are locked into that way of depreciating

their building. This myth keeps many owners from realizing one of the key advantages of cost segregation. From the perspective of the IRS, an owner

who applies cost segregation is changing from an incorrect method, straight line, to a correct method, component depreciation. Not only is this change

in method permitted, approval is automatic once a qualified cost segregation study has been performed and the building owner has completed and

submitted an IRS form 3115. What’s more, IRS rules allow you to realize all of the depreciation adjustment for prior years in the year the study is

completed, which can mean an immediate and significant increase in cash flow.

Myth:Doing a cost segregation study will trigger an audit.

Reality: After more than 75 IRS rulings, procedures, and court cases, the validity of cost segregation studies has been upheld. Also, the IRS has

published detailed audit guidelines and field directives for performing and documenting studies. Our team of experts has completed hundreds of cost

segregation studies without a single challenge from the IRS. In the unlikely event of an IRS challenge, The Concorde Group will provide you with full

audit support at our expense, to defend every aspect of any study we complete.

Myth: Some taxpayers are reluctant to use cost segregation, equating it with a high-risk tax shelter.

Reality:In truth, this reluctance is misplaced. If the cost of the components in the engineering report is well-documented, the cost segregation technique

is no more aggressive than using a permissible depreciation method under the Internal Revenue Code. Experience has shown that in a well-prepared

engineering-based report where tangible property and land improvement segments of real estate can be traced to applicable construction documents,

and the property unit costs are clearly determined, you will normally have great success in an IRS examination sustaining claimed tax benefits.