The focused tax professionals at Cendrowski Corporate Advisors can assist you in taking advantage of cost segregation analysis to gain special incentives. With decades of tax consulting and compliance experience, be assured that our tax planning solutions have been vetted through ever-changing IRS regulations.
Cost segregation is a powerful tax planning strategy for accelerating depreciation and deferring income tax.
What You Need to Know About Cost Segregation Services
When should you utilize cost segregation services? There are several occasions where it can be beneficial, including:
- When you own commercial real estate
- When you are starting a construction project
- When you are adding to your real estate portfolio, renovating, or expanding
- When you’re improving a facility you own or lease; or if you have recently completed similar projects
As an IRS-accepted tool, cost segregation allows the deferral for income tax by reducing taxable income in current years in exchange for increased taxable income in future years.
Real estate holdings represent an enormous capital investment, and cost segregation analysis can provide an opportunity to realize an immediate increase in cash flow for investing in new assets, in just one example.
Cendrowski Corporate Advisors cost segregation services can help improve cash flow by accelerating depreciation deductions.
When Do Cost Segregation Incentives Apply?
If you’re an owner undertaking improvements or launching building projects, you may be eligible for special federal tax incentives. By collaborating with Cendrowski Corporate Advisors tax professionals, we can proactively identify bonus depreciation benefits and seek tax incentives for retail, restaurant, and other qualified leasehold improvements. The same applies for properties you may currently own.
Cendrowski Corporate Advisors Cost Segregation Strategy Structure
- Plan – Conduct interviews, coordinate the process, and determine the feasibility
- Analyze– Review contractor invoices, purchase agreements, blueprints, and architectural plans
- Inspect – Conduct an on-site inspection
- Report – Prepare a detailed report with a summary showing cost reconciliation and tax classification
- Implement – Work with clients to implement changes to fixed asset systems and to facilitate tax filings
Client Success: The Value of Cost Segregation Analysis
If your business has recently acquired, constructed, or substantially improved a building, it’s time for a cost segregation study to help determine which assets are fixed property and what depreciation can be deducted on these improvements. It’s a robust approach for minimizing your company's taxes when cash flow increases.
In one example, a Cendrowski Corporate Advisors client provided our consultants with a list of fixed assets that they have acquired. Fixed assets can be a significant cash outflow for businesses, particularly during a remodel.
Our team analyzed the fixed assets additions during a specific calendar year, and reviewed the client’s schedule of fixed asset additions and related documentation. As a result, we were able to generate current year deductions of approximately 87% of the amounts spent on fixed assets during the tax year by applying the safe harbor election utilizing bonus depreciation.
IRS rules allow business owners who invest in commercial buildings to depreciate structural components, such as walls and windows. You can also save on taxes by claiming depreciation for HVAC systems, elevators, plumbing, or wiring over a 39-year period of time.
Assets are depreciated over their useful life, generating non-cash deductions to reduce taxable income for the taxpayer. In addition, some assets can utilize bonus depreciation to deduct 100% of the cost of the new acquisition. Analyzing fixed asset additions allows for appropriate classification and can give you the ability to speed up depreciation expenses.