A cost segregation study can at first glance seem like an overwhelming and complex process. At Segregation Holding, we pride ourselves in working with our clients on a one on one basis and helping to make the process simple and easy. Generally speaking, cost segregation is a study that is designed to reduce current income tax obligations. When a business’s current income tax obligation is reduced the business will be able to save money as well as increase cash flow. Cost segregation is the process of identifying all the building components that can qualify for accelerated depreciation. The goal of any cost segregation study is to identify all qualifying assets whose depreciation can be reduced. The entire process can be broken down into 8 simple steps.
1. Choose a reputable cost segregation firm – Be sure that firm utilizes engineers and architects that are trained in cost segregation and it’s application to the proper allocation of assets. It is never a bad idea to ask for case studies from previous clients. Most cost segregation firms will require half the fee at the time of engagement so be prepared for that as well.
2. Engineers begin the process – The engineers will sit down with you and determine what documents are available for reference and referral. These can range from invoices, appraisals, drawings and blueprints, to AIA G702s or G703s, an appraisal, or any other relevant forms. Our team here at Segregation Holding will work with you every step of the way.
3. Time and Scheduling set up – A time will be set up for the engineer to survey the property and gather all available documents to help with the cost segregation study. Generally speaking any PDF’s can be transmitted via email.
4. Unavailable documents – In the event that certain needed documents are unavailable, our engineers will recreate those documents, but this will increase the fee. At Segregation Holding we use Marshall & Swift and/or RS Means for all document recreation. Once all the necessary documents are acquired it will take 4-6 weeks to complete the cost segregation process.
5. Site Survey is executed and completed – During this stage,a member of our team of professional engineers will come to the site and complete the survey process. Time will vary based on the physical size of the location but generally speaking the survey can be completed within an hour or so. It is during the survey phase that all measurements are taken and all areas are photographed for IRS verification and substantiation of asset values.
6. Number crunching– After the site survey, we head back to the office and begin the number crunching process. At this time all documents are reviewed in detail, assets are verified and measured against known costing data. During this time the reallocation of assets is applied and this is where we often uncover additional cost saving benefits that is often much higher than our original benchmark estimate.
7. Review – A review committee will examine the results of the analysis and will verify and confirm the accuracy of the report. This step is done to ensure that the study results meet and exceed the IRS guidelines per the cost segregation audit techniques guide.
8. Final report – After approved by the review committee, all results are compiled into a final report. Digital copies are emailed to the client and the CPA of record for application to the client’s tax return.
We deliver amazing results every time we perform a cost segregation study. Our results will often exceed your expectations. So, if you own a profitable business and have a physical location, why not contact us today and see how we can help you keep more of your hard earned money.
Contact us at 972-897-8019.