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John Nagle brings over 30 years of hands on experience as both a real estate developer and owner of hotels,
resorts, multifamily and retail real estate. For more background information on John Nagle Click here.
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What is a CSSI Study?
A CSSI Study is an engineering analysis that reclassifies or segregates
real estate components and improvements between real and personal property
in order to accelerate the depreciation periods from 39 or 27.5 years to 15, 7 or 5 years.
Why haven't I heard of cost segregation?
Cost segregation was first applied and performed by major accounting firms with
in-house cost seg departments on the largest properties of their most significant
clients. One study originally cost upwards of $100,000.
However, CSSI developed the methods and protocols to deliver this same service to
commercial property owners at very affordable rates. This means you can take advantage
of this tax savings that was once only enjoyed by the owners of exceptionally large properties.
Does my property qualify?
Yes, if you:
1) Purchased, constructed or remodeled property after Jan 1, 1986, and
2) Anticipate holding the property for at least a few years.
Can I benefit from a CSSI Study?
Yes. Let us provide the necessary data to your advisors to determine potential tax benefits.
When should a study be done?
It is best to have a study completed for the year the building or improvements are placed
in service. However, IRS Revenue Procedures allow taxpayers to "catch-up" on the depreciation
that was not claimed from the first day the property was placed in service without amending
prior year's tax returns. Furthermore, the IRS recently allowed for the "catch-up" period all
in the first year rather than over four years when the Revenue Procedure 99-49 was first
introduced. A cost segregation study can be performed on any property constructed, acquired
or remodeled since Jan 1. 1986.
What information will be needed to complete a CSSI Study?
While each study differs, we generally request the following information, if available:
1.) A current tax schedule
2.) Building cost information
3.) Change orders
We can assist you in gathering the necessary data.
How does a CSSI Study work?
Building costs are generally classified for federal income tax purposes into
three categories; (1) Tangible Personal Property, (2) Land Improvements, and
(3) Real Property. Each has a different recovery period and method under the
Modified Accelerated Cost Recovery System (MACRS). Our qualified engineering-based
analysis is performed by professional personnel with in-depth knowledge of
construction methods, materials, and building components can perform a detailed
analysis to properly identify the building components and improvements that will
be reclassified to take advantage of accelerated depreciation.
Why should I perform a CSSI Study?
Without a CSSI Study your accountant will only be able to use straight line
depreciation, 39 or 27.5 years. A CSSI Study provides your accountant with
accurate information to establish 5, 7, 15, and 27.5 or 39-year depreciation
schedules, which substantially increases tax savings in the earlier years of
owning your property.
How long does a CSSI Study take?
A CSSI Study normally takes about 4 to 6 weeks from the time we receive all
the appropriate documentation.
Will a CSSI Study trigger an audit?
No. A CSSI Study strictly adheres to the IRS Cost Segregation Audit
Technique Guidelines.
If the CSSI Study comes into question, a engineering-based cost segregation
study professional from CSSI will attend the audit without any charge.
Can a CSSI Study apply to buildings not yet constructed?
No. However, for projects not yet constructed, Strategic Growth can provide estimates
on tax savings from your construction budgets. A CSSI Study will be delivered when
construction is complete.
Why should I choose Strategic Growth?
Strategic Growth and CSSI's engineering-based cost segregation study professional personnel have the
expertise in tax laws, cases, and ruling on cost segregation, along with real
estate development and construction experience to maximize your tax savings.
Only exceptionally large accounting firms have in-house engineers who can perform
a cost segregation study at substantial fees. We will work with your advisors
to help you take advantage of this extremely viable tax savings solution.
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