SHAPING YOUR FINANCIAL DESTINY www.daviekaplan.com tel (585) 454-4161 · fax (585) 454-2573 1000 First Federal Plaza · Rochester, NY 14614 Cost segregation is not some risky or aggressive tax scheme. It i s a way to free up cash in the short term, so you can redeploy it in the ways you need it most. How does cost segregation work? A cost segregation study analyzes your capital expenditures and splits your real estate into “real property” and “personal property”. Real property can take as long as 39 years to fully depreciate. But personal property depreciates much quicker, in 5 to 7 years. By appropriately allocating your assets between these two classes, you can take advantage of deductions you would otherwise have to wait years to receive. This reduces your tax obligations, boosting your current cash flow. As a real estate owner, you cannot afford to wait for returns on your investment. You need practical ways to reduce costs and free up cash, so you can manage your operational expenses and invest in new opportunities. What if your property itself could actually save you money? Cost segregation does just that. A cost segregation study pinpoints which of your building components may qualify for “accelerated depreciation”, or a larger tax deduction over a shorter time frame. Under accelerated depreciation, costs that normally take decades to fully depreciate can be deducted over 15, 7 and 5 years. That means increased cash flow and lowered cost of capital—which could be crucial in the early years of your real estate investment. Depending on your property, you may be able to accelerate the deduction for costs such as: • Wall coverings • Carpeting • Accent lighting • Plumbing fixtures • Furniture • Parking lots • Landscaping • Sidewalks • Architects’ fees • Appraisals • Legal fees SEGREGATION COST (over) • Electrical components
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shaping your financial destiny
www.daviekaplan.comtel (585) 454-4161 · fax (585) 454-25731000 First Federal Plaza · Rochester, NY 14614
Cost segregation is not some risky or aggressive tax scheme. It is a way to free up cash in the short term, so you can redeploy it in the ways you need it most.
How does cost segregation work?A cost segregation study analyzes your capital expenditures and splits your real estate into “real property” and “personal property”. Real property can take as long as 39 years to fully depreciate. But personal property depreciates much quicker, in 5 to 7 years.
By appropriately allocating your assets between these two classes, you can take advantage of deductions you would otherwise have to wait years to receive. This reduces your tax obligations, boosting your current cash flow.
As a real estate owner, you cannot afford to wait for returns on your investment. You need practical ways to reduce costs and free up cash, so you can manage your operational expenses and invest in new opportunities.
What if your property itself could actually save you money?
Cost segregation does just that. A cost segregation study pinpoints which of your building components may qualify for “accelerated depreciation”, or a larger tax deduction over a shorter time frame.
Under accelerated depreciation, costs that normally take decades to fully depreciate can be deducted over 15, 7 and 5 years. That means increased cash flow and lowered cost of capital—which could be crucial in the early years of your real estate investment.
Depending on your property, you may be able to accelerate the deduction for costs such as: • Wallcoverings• Carpeting• Accentlighting• Plumbingfixtures
Is Your Property Eligible?If your property was built after 1986, then we can perform a cost seg-regation study for you. In addition, properties purchased and renovations made after 1986 also qualify, regard-less of your building’s original date of construction.
Properties that can benefit from a cost segregation study include:• Apartments• Distribution facilities
Is Cost Segregation Right For You? Cost segregation works for com-mercial properties of almost any size and industry, although it is usually most cost-effective for buildings purchased or remodeled for over $500,0000. A minimum expected holding period of the building should be 5 years. Cost segregation benefits may be greatly increased with the availability of Section 179 expensing and bonus depreciation.
If you are involved in new construction projects, you would benefit substantially from the boost in cash flow a cost segregation study can provide. But cost segregation can also help you find tax savings for property acquisi-tions, leasehold improvements and renovations or expansions of existing properties.
Why Davie Kaplan?Cost segregation is more than just counting line items on an expense sheet. It is a complex, nuanced proce-dure that requires creativity, analytical skill and a thorough understanding of both tax law and construction principles.
At Davie Kaplan, you and your property are in good hands. With our resources and years of cost segregation experience, we will take the balanced, intelligent approach you need. Our accountants are experts in tax regulations, and we partner with only the most knowledgeable engineers—so we find every last deduction you qualify for.
To learn more about how a cost segregation study can help you, contact Brian M. Sauers, CPA at (585) 454-4161.
• SupermarketsRelated Studies: Abandonment studies pursuant to the tangible property regulations may be used to claim disposal losses on improvements made to your building.
179D studies can produce significant tax deductions for energy efficent improvements.
