Please correct the following errors:
Cost segregation provides cash flow solutions
Fast Facts
Return to Homepage
For copies of this publication or article, contact circulation@businessreport.com.
Published with the October 1, 2013 Baton Rouge Business Report. Copyright © 2013 Louisiana Business Inc. Special Advertising Section.
Commercial property owners, here’s a pop quiz: If you had the choice to take several thousand dollars in cash today or to take portions of that amount equally over 39 years, which would you choose?
This is no trick question. Of course, you’d want the money now, whether to reinvest in your business, pay down principals or purchase more property. But many property owners don’t realize they could be doing just that—gaining cash flow from tax savings and reaping immediate economic advantages.
That’s where Cost Segregation Services Inc. (CSSI) comes in. As the nation’s leader in engineering-based cost-segregation studies, this rapidly growing Baton Rouge-based company guides commercial property owners and their tax professionals through the process of accelerating depreciation and reducing the amount of taxes owed by using the IRS-approved application of cost segregation.
“The money is yours as an option,” says industrial engineer and economist Jim Shreve, CSSI’s founder and CEO and the developer of the process of applying cost segregation for use by commercial property owners. “The IRS expects you to use this option. It is not a loophole.”
So what is cost segregation? Simply put, it’s a method of reclassifying components of and improvements to a commercial building from real property to personal property, thus allowing assets to be depreciated more quickly than the traditional 27.5- or 39-year schedules.
Working with CSSI begins with a no-cost preliminary property analysis, through which the firm’s engineers and economists review a building’s tax depreciation schedule and estimate the potential tax savings. The next step is a thorough cost-segregation study, usually completed in four to six weeks. “Our prediction is met or exceeded 99.9% of the time by the actual study results,” Shreve says. “We deliver the report to the client and assist his tax professional, if needed, to ensure that the savings are realized in the tax return. It works every time.”
Since its inception in 2003, CSSI has provided studies to more than 8,000 clients around the country, providing an average after-tax-savings cash flow of $50,000 to $80,000 per client. For larger investors, the savings can range from $500,000 to $1 million. And new Tangible Property Regulations will allow the tax savings to increase even more by allowing owners to “write down” building components that have been disposed of because of renovations or improvements.
CSSI has recently been named a preferred provider for the Los Angeles Better Buildings program, generating results that have had a national impact on the application of “sustainability energy programs” to commercial properties.
“It’s a practical economic matter,” concludes Shreve. “It is like unlocking cash flow off of your assets on your balance sheet. We are glad to give a financial review at no cost to estimate the potential savings of the cost segregation tax option.”
Get in Touch