WHAT IS A COST
SEGREGATION STUDY?
A
cost segregation study allows owners of investment real estate to
increase their cash flow by accelerating depreciation-related tax
deductions. The study identifies and reclassifies property costs
currently depreciated over the typical 39 year depreciable period to
shorter periods of 15,10,7 or even 5 years. For instance, you may be
able to define the parking lot as 15 year property, and landscaping
and shrubbery as 10 year property. You could also classify lighting,
plumbing fixtures, and carpeting as 7 year property. And items such
as electrical and ventilation systems, phone lines, computers and
furniture can be classifiable as 5 year property. This means you can
enjoy tax deductions right now instead of waiting years to receive
them. So you’ll not only increase the net value of current tax
savings, but also boost your cash flow.
HOW MUCH CAN I SAVE AND
HOW MUCH WILL IT COST ME?
It costs nothing to find out
how much you can save which oftentimes is six figure tax savings
that can be secured immediately and accumulated over a three year
period. And perhaps best of all, the fee for the cost segregation
study that brings about these savings is generally only 10% to 20%
of the resulting cash flow increase.
HOW WILL I KNOW IF A
STUDY WILL PRODUCE TAX SAVINGS AND INCREASE CASH FLOW?
Your R. J. GULLO COST
SEGREGATION CO., INC., Advisor will obtain building facts and will
provide you with a cost saving benefit estimate that identifies how
much money you can save immediately (year one) and accumulated over
a 3 year period.
WHAT ABOUT OTHER
INVESTMENT PROPERTY I OWN?
R. J. GULLO COST SEGREGATION CO., INC., can
provide a Cost Segregation Tax Saving Benefit Analysis for any
investment property that you own and was purchased after 1986. This
benefit analysis will identify how much money you can save
immediately (year one) and accumulated over a three year period.
WHAT TYPES OF PROPERTY
BENEFIT FROM COST SEGREGATION?
Hotels,
retail stores, apartments, office buildings, manufacturing
facilities and any other commercial buildings built or purchased
after 1986 generally benefit from Cost Segregation. Internal Revenue
Service guidance allows a depreciation “catch-up” on property placed
into service in prior years without amending tax returns. The
favorable depreciation adjustment can be taken in one year.
WILL I HAVE TO CHANGE MY
CPA IF I HAVE A COST SEGREGATION STUDY PERFORMED?
No, Cost Segregation Studies
can be prepared for those who already have a CPA. Our report will
provide the necessary information for a CPA or tax preparer to
include the Cost Segregation Study on the tax return.
CAN A COST SEGREGATION
STUDY BE PREPARED BY ANY CPA?
Not usually. A Cost
Segregation Study requires an understanding of IRS guidelines for
those component parts of investment Real Estate. Property qualifying
for shorter depreciable lives as well as knowledge of Investment
Real Estate Taxation and Construction Engineering.
WHAT IS THE MINIMUM
PROPERTY VALUE FOR A COST SEGREGATION STUDY TO BE BENEFICIAL?
The minimum value for a Cost
Segregation Study to be beneficial is One Million Dollars
($1,000,000).
Here are some
examples of how we helped a few of our clients recently.
An owner of a Apartment
Building located in Niagara Falls, New York, acquired the property
for $7,200,000., we were able to accelerate an additional $918,000.
of depreciation expense (paper losses) resulting in a tax savings of
$395,000.
An owner developed a new Motel
in 1996 for $1,800,000. in Greenwood, South Carolina, we were able
to accelerate an additional $235,000. of depreciation expense (paper
losses) resulting in a tax savings of $101,000.
An owner of a Plaza in
Memphis, Tennessee which cost $3,000,000. received an additional
$390,000. in accelerated depreciation expense (paper losses)
resulting in a tax savings of $168,000. These are just a few
examples of recent deals and we can do the same for you.
FOR A FREE
COST SEGREGATION TAX SAVING
ANALYSIS
WITH
Russell J. Gullo, CCIM,
CEA
CALL
(716) 675-1500
