Cost Segregation Buyer’s Checklist

Cost segregation may benefit me because:

  • I built, bought or exchanged into depreciable real estate within the last 15 years, or
  • I received a step-up in cost basis for my property due to buyout of a co-owner or inheritance, or
  • I renovated or expanded my property at a cost of $1 million or more, or
  • I am selling, or recently sold a property and there is a taxable gain on sale of $50,000 or more.

There is significant income tax savings potential from cost segregation because:

  • I am making money and paying income taxes in a high tax bracket.
  • The improvements are mostly or entirely on a long depreciation schedule (39 years for commercial or 27.5 years for residential)
  • My property has an initial cost basis of $1 million or more, and I put it into service no more than 15 years ago, or if I only own tenant improvements…
  • My tenant improvements alone have a cost basis of $200,000 or more and I put them into service no more than 15 years ago.

Action Items:

 Find a qualified cost segregation provider (see The Complete Cost Segregation Buyers Guide, below)

 Obtain a complimentary estimate of tax benefit and fee quote

 Discuss the estimate with my tax advisor to confirm the expected outcome

 If Form 3115 will be required, determine who will complete it (my accountant or the cost segregation provider)

 Engage the cost segregation provider for my study

 Have my accountant review and accept the results of the study and incorporate them into my income tax filing

Want to know more?

The Complete Cost Segregation Study Buyers Guide will give you the knowledge you need to ask the right questions and make a sound decision when it’s time to pick (or change) providers. Read this guide to obtain the benefits of cost segregation with the least time, effort, worry and cost.

In this guide, you’ll learn:

  • Make or Buy? Should you (or your CPA) perform a Do-It-Yourself Cost-Seg Study?
  • How to predict the outcome of a study
  • What to look for in a cost segregation provider
  • How to assess fee quotes for service
  • How the cost segregation process works
  • Implementation: getting your tax benefits
  • What happens if you are audited?

BUYERS-CHECKLIST

About the Author Jeff Glass

Jeff helps real estate owners increase their cash flow. He started his career as a Financial Analyst with the Irvine Company, and worked in various management/executive positions in the mortgage industry for many years. He's been a Cost Segregation consultant for several years and is considered one of the industry's top experts in TPRs. As Director of Business Development for Bedford Cost Segregation, Jeff helps his clients increase cash flow by accelerating their depreciation deductions, and by writing off assets that no longer need to be depreciated under recently changed tax rules. Jeff has a B.S. in Economics from Claremont McKenna College and an MBA with an emphasis in Finance from UC Berkeley.