What is Cost Segregation?
Cost segregation is a cash flow strategy that uses the IRS approved tax code to accelerate the depreciation of certain components of investment properties. This then frees up significant cash now rather than a tiny bit at a time using the standard long term depreciation period of 39 years for commercial properties.
You can then you can use that cash to reinvest into your property for improvements or it can be used to acquire additional investment properties. If you acquire additional investment properties you can apply the cost segregation method to those properties as well, creating a domino effect of freeing up cash to keep reinvesting.
If you’d rather have your money now than over a 27 or 39 year period then cost segregation is very likely a surefire way for you to be able to access your cash earlier than 95% of real estate investors.
Step 1 // Property consultation
Before we begin evaluating the details of your property we’ll run an Estimate Benefit to see if it makes sense to use the cost segregation method on your investment property. This shows us the projected accelerated depreciation and subsequent tax savings for the current tax year and the next 2 years.
With just 3 pieces of easily accessible information we can let you know just how significant the tax savings & freed up cash can be if you decide to apply the cost segregation method to your real estate investments.
Step 2 // Property On-Site Verification
This is the IRS-required stage where we visit your property, document your property’s components & gather supporting documents to help us understand exactly how your property has been built & improved.
Our mobile app captures & simplifies this on-site verification, creating a seamless process so that our engineering & tax team can review the verification that same day.
Step 3 // Construction Cost Estimation & Legal Analysis
Using IRS guidelines to defend your property’s cost segregation analysis & our real estate development experience of over 30 years, we determine what the cost to develop your property would be today, a process known as Reconstruction Cost New {RCN}.
After this RCN is determined, we use court cases, IRS regulations and audit procedures to leverage against the facts and circumstances of your property. This helps us determine which components of your property can be reclassified to shorter depreciation timeframes.