As a firm that has concentrated on serving real estate developers and contractors for more than 40 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.
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. If you have any questions or would like more information, please contact us at info@CaseSabatini.com.