RENT Magazine Q4'23

s F e d e r a l I n co m

Accelerate your Depreciation Expense and Increase Cash Flow through Cost Segregation Why have so many building owners missed this IRS approved method to lower their taxes? How many building owners continue to send extra money to the IRS? Articifial Intelligence replied...

“As a rough estimate, a relatively small percentage of building owners, perhaps in the single-digit percentage range, are likely to have used cost segregation. Many property owners may not be aware of the benefits, or they think their properties might not meet the criteria for cost segregation to be cost-effective.””

So what is a cost Segregation Study? A cost segregation study is a set of calculations created by an independent firm with extensive tax and construction knowledge. At CSSI®, we create an engineering-based cost segregation study by analyzing your building and its assets within U.S. tax code guidelines. When an engineering-based study is performed, actual cost records and construction documents are reviewed, when available, and a site visit is completed. A quality cost segregation study should include the 13 points outlined within U.S. tax code. Our methodical approach identifies individual components of your commercial property, which are included in your detailed cost segregation study. Time Constraints/Awareness CPAs, thousands of whom we have educated in our classes, are extremely busy and cannot possibly keep up with all 70,000 pages of code, statutes, notes and court cases. One more fact, from 2001 to 2012 there were 4680 changes averaging about one per day. We, on the other hand focus on the eight chapters of the IRS’s audit technique guide.

The Simple Criteria Purchased, Constructed, Remodeled/Renovated a property after 1986 (basically moot today) Cost basis must be over $300,000 (Renovations $100,000) Must be a for profit entity (no charities, churches, etc.) Must have a tax liability or there is no benefit. 1. 2. 3. 4.

Actual Federal Tax Reductions Due to Cost Segregation

Property Cost

Year 1 Cash Benefit*

Building Type

$480,000

$44,012

Office Condo

$1,400,000

$185,320

Tenant Improve

Restaurant

$2,680,000

$244,877

Warehouse

$6,370,000

$357,047

$498,857

Medical Facility

$8,900,000

Apartments

$15,100,000

$807,051

Retail Strip Center

$22,300,000

$1,227,953

*2017-22 Bonus = 100% Reduces 20%/yr. thru 2026. Balance reverts to 20,14 & 7% yr. rates vs. 3.74 or 2.56%

This is YOUR MONEY.. Keep it! Now please ask yourself, can you do a better job with your money than what the government did when they spent hundreds of millions of dollars on these actual funded projects: Why do pigs smell; Free Clam Program for those who have never eaten clams; the breeding habits of woodchuck, and one that luckily did not make it, the Bridge to Nowhere.

800-344-7671 mq@costsegserve.com

calendly.com/tony-bonifacic MQ.CSSIstudy.com

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