Discussion Archives:Cost Segregation Reports

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Discussion Forum Index --> Tax Questions --> Cost Segregation Reports


FLCPAVB (talk|edits) said:

15 January 2008
I am a CPA in Floirda - asking the Forum whether any member has ever seen or had commissioned a "Cost Segregation Report" for a client - who owns - is constructing or renovating a large Real Estate Project. The special study (by an independent engineering firm) enhances the "Depreciation Expense" thus providing immediate cash flow (depreciation sheltered income).

Natalie (talk|edits) said:

January 15, 2008
broken link deleted

Lrussell (talk|edits) said:

15 January 2008
Yes, I have a client who has had several cost segregation studies done on its retirement home projects.

CPAdavid (talk|edits) said:

16 January 2008
I worked for a very large southeastern regional firm, at a FL office and we had a partner who specialized in cost segregation studies. Big savings for clients. Big bucks for the firm. Really big bucks. All we did was present the idea to the client. We got the building blueprints and sent them to an engineering firm in another state that specializes in cost segregation studies. The engineers did all the calculations and determined if such a study would benefit the client. If so, it was a no-brainer for the client.

Natalie (talk|edits) said:

January 16, 2008
That wasn't a very good link above. Sorry about that.

In your experience, David, was there a certain type of business that would benefit more than others from this analysis? It would seem that in order for it to be cost effective, there would need to be a certain level of expenditures.

CPAdavid (talk|edits) said:

16 January 2008
I was never involved in the cost segregation activity, but as I recall, the cost/benefit analysis was based on the cost of the building and components. It cost quite a bit to do the engineering study and segregation of components that could be depreciated over a shorter life from that of the longer life building structure. There was a rule-of-thumb dollar amount but I don't remember what it was. Definitely in the millions though. Generally it wouldn't pay to have a cost segregation study done on a building worth 500k. They compared the potential tax savings with the cost of the study. Since the "savings" is really a deferral I think they had to do present value calculations and all that.
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