What is Cost Segregation?
Cost segregation is a tax planning strategy that can help real estate owners and tenants to accelerate depreciation deductions. Although standard depreciation occurs over a lengthy 39-year period, many assets within a structure–from plumbing and electrical fixtures to flooring–are not designed to last that long.
The ability to break out such assets for a five-year, seven-year, or 15-year recovery period helps accelerate depreciation, defer taxes, and improve cash flow.
When Can You Perform Cost Segregation?
Cost Segregation is useful throughout the real estate life cycle:
- Recent Acquisitions
- New Construction
- Pre- and Post-Renovation
What Are the Benefits of Cost Segregation?
- Accelerated Depreciation
- Bonus Depreciation
- Increased Cash Flow
- Decreased Tax Burden
- A Quality Study Provides the Documentation Required to Support a Host of Tax Strategies, including Tangible Property Analysis, Partial Asset Disposition, and EPAct 179D Energy Efficiency Deductions
Subject Matter Experts
FULL COMPLIANCE with ASCSP MQS 2016 and Subsequent Audit Technique Guideline
METICULOUS In-Person Site Visits Document all Assets to Support Tax Strategies
30 day Turnaround from Site Visit to REPORT DELIVERY
COMPREHENSIVE REPORT includes Photos, Spreadsheets, Graphical Analysis, and 100+ Pages of Content
Partners Each Have
of Industry Experience
Experience in all
Certified Professionals on Staff
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Client-Centered Cost Segregation
We’re Focused on Your Goals
We meet to understand the facts and circumstances of each project so we can
suggest the right tax strategies to meet your needs.
Considering the timeline, estimated benefits, and property details, we create a customized plan to maximize tax savings.
Our engineers and specialty tax advisors give you the necessary data and analysis to support tax savings.
We actively revisit projects if new savings opportunities become available and stand by our service with a warranty of no-cost audit defense.
Purchasing a vehicle online is a viable option these days, but only a small subset of the population is comfortable doing so. Many patrons begin browsing online, but most will eventually end up in a physical showroom, and that’s why dealership refreshes remain popular. Dealers are making certain that their online presence is modern, attractive, and welcoming, and they want their showrooms to evoke the same feelings.
The hospitality industry has changed a lot in the past decade. Guests want to select lodging that aligns with their values, and hoteliers are making eco-friendly choices and incorporating biophilic design into new spaces. Tax strategies like cost segregation can help offset the costs of these choices, making an eco-friendly hotel into a reality.
Renting is more popular than ever – the population of renters in U.S. cities has increased by over 30% since 2000. This has driven a commensurate increase in multifamily construction, and developers are striving to stand out from the pack. Current trends for attracting and retaining residents include time-savings services, flexible wellness zones, and pet-friendly amenities. These “extras” are attractive, but also add to a developer’s bottom line, and many seek out tax savings strategies to offset some of this initial investment.
Office buildings with tenant and common areas are strong candidates for cost segregation. The combination of personal property in tenant-specific improvements, along with land improvements that accommodate the building’s parking needs, consistently result in solid first-year tax savings.
While there will always be a place for the traditional enclosed shopping mall, many consumers today prefer open-air shopping centers. These days convenience is key, and shoppers enjoy the ease of driving right up to their retailer of choice. Developers are heeding the call, and many have converted increasingly vacant indoor malls into bustling open-air shopping centers.
The restaurant industry has always been competitive, as consumer tastes and trends can be quite changeable. Even so, entrepreneurs with a passion for food are undeterred, and many are taking advantage of the recent CARES Act to increase critical cash flow in a restaurant’s early years.
The self-storage market has become highly competitive, with new facilities opening frequently. Owners are adding extra features to attract customers, emphasizing security and curb appeal. Naturally, owners want to ensure that they are getting the greatest possible return on these investments. Capstan has partnered with hundreds of owners and their tax advisors, collaborating to ensure maximum tax savings on self-storage facilities.
In nearly 20 years as a Cost Segregation Professional, Capstan’s Ziv Carmel thought he’d seen it all. He was wrong.
This fall, Ziv journeyed to scenic Norway, Maine, to explore The Woods Maine, a high-end custom treehouse that combines bespoke and bucolic with remarkable results. The Woods Maine is a privately-owned Luxury Treehouse designed by world-renowned Treehouse Master, Pete Nelson. The stars of Animal Planet’s Treehouse Masters, Pete Nelson and Nelson Treehouse & Supply are artists who seek to make everyone feel “at home in the trees.” With The Woods Maine, they certainly succeeded.
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Types of Cost Segregation Studies and Related Services
What type of Cost Segregation Study is right for your project? Different opportunities call for different types of study, and several options are listed below. We’ll work together to select the most appropriate Study for your project based on your current circumstances and your future plans.
Standard Cost Segregation Study (SCSS)
The Capstan Standard Cost Segregation Study (SCSS) is designed to aid commercial real estate owners in the United States. By leveraging the IRS-accepted practice of cost segregation, the SCSS can generate significant tax savings.
The SCSS adheres to the IRS Audit Technique Guidelines, documenting the data required to support accelerated depreciation. It can be used in most ownership scenarios and is applicable to everything from new acquisitions to look-back studies of assets placed into service as far back as 1987.
Cost Segregation Desk Review (CSDR)
The Capstan Cost Segregation Desk Review (CSDR) is a streamlined form of the Standard Cost Segregation Study that is appropriate for simple, new construction projects only, as there is no associated on-site visit.
The study synthesizes the existing detail found in invoices, contractors’ ledgers, and a full set of construction drawings to accelerate depreciation and ensure that all assets are placed in the proper Modified Accelerated Cost Recovery System (MACRS) asset class life.
The Capstan Tax Director will prepare any required 3115 tax documentation in order to change the accounting method of an entity, which often occurs at the conclusion of look-back cost segregation studies. This service is typically performed at the request of the client’s CPA.
Advanced Cost Segregation Study (ACSS)
The Capstan Advanced Cost Segregation Study (ACSS) enhances the level of asset pricing detail found in SCSS, particularly regarding base-building assets (Section 1250 assets). The purpose of this additional detail is to enable a property to undergo future asset dispositions in accordance with the IRS-issued Tangible Property Regulations.
Capstan Tax Strategies
200 Dryden Road
Dresher, PA 19025