Cost Segregation

Cost Segregation has evolved from similar processes used in the 1970s and 1980s to complete investment tax credit studies. Investment Tax Credit (ITC) – When this credit was repealed in 1986, most assumed cost segregation studies provided no further benefit under the new tax law. However, in 1997 a landmark tax court case, Hospital Corporation of America succeed in defending the application of engineering-based cost segregation as a viable method to differentiate real and personal property under existing law.

In 2004 the IRS released the Audit & Technique Guideline, making clear the expected process of performing a successful Cost Segregation Study. This opened the doors for many small and midsize companies to begin taking advantage of what was previously only pursued by larger companies.

Any commercial property owner who has done the following since 1987:

• Purchased a commercial building or facility
• Constructed a new commercial building
• Renovated, remodeled, restored or expanded an existing facility
• Paid for facility leasehold improvements

According to the U.S. Treasury Department, “Cost Segregation Studies are a lucrative tax strategy that should be considered in almost every real estate purchase.”

An average Cost Segregation Study offers approximately $150,000 in additional depreciation per $1 million dollars in purchase or construction cost over the normal 39 year straight line method.

“Cost Segregation Studies are a lucrative tax strategy that should be considered in almost every real estate purchase.” -U.S. Treasury

“…Cost Segregation Studies should be performed by qualified individuals or firms such as those employing personnel competent in design, construction, auditing, and estimating procedures relating to building construction.” -U.S. Internal Revenue Service

GMG utilizes a team of highly qualified professionals adhere to the IRS recognized Detailed Engineering Approach to perform all Cost Segregation Studies. This methodology maximizes benefits and assures that IRS guidelines are followed.

An initial consultation along with a feasibility report is conducted to determine the cash flow and net present value (NPV) benefits. The consultation allows our professionals to evaluate your current tax status and your future business plans along with your CPA to determine if a study would be of benefit.

The initial consultation is a simple and quick process. To schedule your consultation,
please contact us.