 As a firm
that has concentrated on serving real estate developers and
contractors for more than 30 years, Case | Sabatini has developed
considerable expertise in this area. In addition to serving clients in
our own region, we have performed cost-segregation studies for
properties nationwide.
Cost segregation
studies provide clients with a thorough review of all costs involved
in buying, building, or renovating a property. Generally speaking, our
professionals identify and reclassify (or “segregate”) each component
of a building into structural (“real”) or non-structural (“personal
property”) asset classes. Much of the segregation depends on whether
the costs are considered building costs or costs associated with
providing your particular products and services to your customers. A
well performed cost segregation study must consider, understand, and
adequately break out costs as they relate to business operations.
We generally begin by
making numerous determinations about your property as well as your
business operations. Areas we would consider include (but would not be
limited to):
- building and land
costs
- the types of
renovations you have made
- dates assets were
placed into service
- your future plans
for the property and operations
- certain
construction documents (e.g., AIA documents, construction drawings,
surveys, etc.)
- availability of
recent appraisals
- profitability of
operations
- a review of your
business returns from recent years.
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Benefits of Cost Segregation Studies
The amount of savings realized will vary depending on your specific
expenditures, business operations, and other financial factors.
However, most facilities usually derive benefits such as:
- increased cash
flow (resulting in increased cash available for new projects)
through accelerated federal tax depreciation of construction-related
costs
- substantially
reduced corporate and possibly individual income taxes
- net present value
savings on federal tax depreciation
- potential
reduction of state and local real estate and personal property taxes
- maximized tax
credits
- opportunity to
claim “catch-up” depreciation on misclassified assets
- potential ability
to better manage your capitalized assets
- our independent
analysis, which we will provide and which can be used in the event
of IRS scrutiny.
Typical Case | Sabatini Services
Our firm will develop a thorough cost-segregation report documenting
the methodology and tax positions involved. To accomplish this, we
typically conduct an on-site property inspection, examine project
blueprints, review contractor pay applications, analyze invoices,
interview contractors and other personnel, apply standard industry
benchmarks, utilize architects and engineers where needed, and perform
a host of related tasks.
How to Get Started
Prior to performing any billable work, we like to perform a
preliminary review in order to estimate potential tax savings. After
our review, we will then deliver a proposal to you, the fees for which
will be determined by the amount of time and expenses necessary to
achieve the potential tax savings for each project. Generally, the
first year tax savings alone will exceed our proposed fees many times
over.
*We offer these preliminary reviews at no cost
to you. If we do not foresee worthwhile tax savings, we will not
propose on your project.* In order to get started, please
contact Debra Pitschman, chair of our Real Estate industry practice
group, toll-free at (866) 392-CASE, or via email at
pitschman@casesabatini.com.
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