Cost Segregation Services
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Cost Segregation Services
Expedite Business Property Tax Deductions
Whether you built your facilities, recently acquired, acquired years ago, or have made improvements to facilities, you may have an opportunity to optimize your asset classifications and reduce your taxes. Cost segregation doesn’t require us to file amended returns, and there is often an opportunity for “catch-up” depreciation resulting in significant savings on current tax filings.
While most real estate assets are depreciated over 27.5 or 39 years, many assets inside a building qualify for much shorter depreciable lives. Cost segregation studies identify and reclassify shorter-lived assets resulting in substantial cash flow and net present value benefits. As a result, taxpayers who properly classify their construction or acquisition costs between real and personal property can achieve substantial tax deduction acceleration and cash flow savings.
Cost segregation services at DMJPS carefully break down construction and acquisition costs and allocate them to specific categories, maximizing accelerated depreciation for qualifying building components. The shorter the depreciation period of building components, the more you save on property taxes.
DMJPS detailed cost segregation studies pay for themselves many times over, starting with the first year the property is placed in service. In addition, investing in cost segregation for tax purposes will maximize your depreciation benefits and provide fully documented support for your depreciation claims should the IRS audit you.
Whether constructing a new building, expanding an existing one, purchasing real estate, rehabilitating an old facility, or relocating with leasehold improvements, your property can generate much faster tax deductions and cash flow savings than you realize.
How DMJPS Conducts Cost Segregation Studies
The key to successful cost segregation studies is that the allocation is based on an engineering approach and work paper documentation. DMJPS works closely with a professional group of construction engineers with a thorough knowledge of the tax code and experience in successfully explaining and defending IRS inquiries into cost segregation services since 1981.
Building costs are generally classified for federal income tax purposes into three categories. Each category has a different depreciation recovery period and method under the Modified Accelerated Cost Recovery System (MACRS).
Tangible Personal Property | 5 or 7 years |
Land Improvements | 15 years |
Real Property | 39 years |
DMJPS’ cost segregation studies help you identify items that need to be properly classified. For example, a business taxpayer who owns a manufacturing facility could classify the cost of certain equipment foundations, exhaust and ventilation systems, security systems, and electrical distribution as tangible personal property. Site improvements such as landscaping, underground utilities, and lighting could qualify as land improvements. Knowing the difference is critical. So is the ability to support and document decisions.
Using tax, construction, and engineering skills, DMJPS cost segregation services team thoroughly analyzes your construction and acquisition costs. We then quantify take-offs from the construction drawings, which maximize the amount of personal property costs and provide the required documentation to support our conclusions.
DMJPS’ cost segregation professionals unbundle costs and assign them appropriately – not only the direct costs but also a portion of any indirect costs, such as architect and engineering fees, contractors’ general conditions, permits, and bonds. We have extensive knowledge of construction methods, engineering, and the Internal Revenue Code, including the applicable tax court cases and revenue rulings. The capabilities of our cost segregation services, which combine accounting and engineering expertise, include the ability to read blueprints and fully understand construction materials, costs, and taxation.
Partner With DMJPS to Maximize Property Tax Reduction
Do you want to generate a faster return on your property investment? The DMJPS cost segregation services team can help. With offices in Greensboro, Asheville, Boone, Durham, Marion, Sanford, and Wilmington, it’s easy to schedule a time to meet our team in person or through secure teleconferencing. Contact us and schedule a
consultation to learn how to best reduce property tax payments, improve cash flow, and maximize your profits.