Why A Cost Segregation Study?


Hi, this is Julio Gonzalez with Engineer Tax Services. You know, as we discussed in the past real estate is one of those few investments in the United States where you get to expense it. And cost segregation study is the method by which we determine which components of the building have much quicker exhaustion rate and are non structural. It can be basically immediately expensed your cost segregation study, which is an independent engineering report that goes to the IRS that determines the components within that building that can be immediately expensed. So, if we had a purchase for $10 million, and we determined that $5 million of that building is non structural, and has quicker exhaustion rates, that components those components in the report can be immediately expensive. Well, that's important because it's big on wealth present And that's why all the real estate investors out there, you know, preserve so much wealth because they buy real estate, they get big deductions from cost segregation, which is a must for every real estate investor. So let's talk about cost segregation, because one benefit is the accelerated depreciation. Now, cost segregation is a living document. So we get that initial benefit, but we don't put it on the shelf and let it have dust and accumulate dust and things of that nature. We use it every year, because every year the building is living, it's changing. We're taking out pause, we're taking out the HVAC systems. So we're taking out the lighting systems, we're removing floors, things of that nature. So it's important when you have the cost segregation study, to use it every year to update it, so that we're coming up with the values of the properties that are removed, expensing those for the remaining value of depreciation on the books, and why does that help one another? Because we're getting additional write offs, too, because now we're minimizing recapture, because now we don't have a depreciable asset, though, upon sell would be recaptured, because the asset has no value. So that's, that's really important, right? So you made the investment upfront for the cost segregation study. But now you're going to use it to mitigate recapture continually updated annually for additional expenses when the assets within the building continue to be removed or replaced. So those are two big benefits. And then ultimately, that report then can allow you to preserve wealth and minimize taxes when you go to sell the building. Because now we have a blueprint for the building value, we can certainly determine how that components of that building are to be sold to, you know, maximize benefit to you by minimizing taxes. So, again, cost segregation, great for accelerating write offs, too. Great for Annual dispositions and the retirement for recapture purposes and three, and ultimately selling that asset and maximizing the value of that building through the life by one record. So you have any questions you know where our website is engineeredtaxservices.com you can go to askjulio@engineeredtaxservices.com for any questions you have. And I'm sure there are a lot of questions. But you know, one thing is that we're always available 24-7 to make sure that we're answering your questions and helping you with these services. So, again, Engineer Tax Services were a resource to thousands of CPA firms nationally, we work with them and their clients to make sure that their real estate is tax efficient. And we've been a resource for the last two decades. You know, we try to bring the services as best in class, you know, understanding that the CPA firm and the client are the most important client to the CPA. Until So, with that, you know, please reach out to us. And if you have questions, we'll continue to bring videos on what cost segregation is. Thanks

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