Cost Segregation

Scarpello Consulting Works with Property Owners or Their CPA to Reduce Current Income Tax Liabilities

What is Cost Segregation?

Cost Segregation is an engineering-based, tax savings tool to help companies reduce current income tax liabilities by accelerating depreciation deductions for qualifying components. This is a tax strategy that should be considered by nearly every taxpayer who owns, is constructing, renovating or acquiring real estate. By using an engineering- based approach to identify assets within a building that can be reclassified into much shorter depreciation recovery periods than the building itself, significant tax savings can be achieved.

Generally, an entire building would be classified with a straight-line depreciation cycle of either 39 years for commercial and industrial property or 27.5 years for residential-rental property. By applying a Cost Segregation study, you can maximize your inherent tax benefits by identifying, classifying, and segregating the personal property components of the building. This results in accelerated depreciable lives of 5, 7 and 15 years thus saving thousands of tax dollars.

Scarpello Consulting Case Studies

COMMERCIAL OFFICE BUILDING
Building Cost: $17,744,139.88
Total Reclassed Basis: $3,425,425.45
Total After Tax Net Present Value Benefit: $1,042,186.80
Total First Year Tax Savings: $1,510,103.95
 

APARTMENT COMPLEX
Building Cost: $23,002,162.49
Total Reclassed Basis: $5,183,242.80
Total After Tax Net Present Value Benefit: $1,430,923.57
Total First Year Tax Savings: $2,303,303.52
 

FAST FOOD RESTAURANT
Building Cost: $3,442,271.55
Total Reclassed Basis: $1,813,242.17
Total After Tax Net Present Value Benefit: $558,370.30
Total First Year Tax Savings: $806,411.34
 

Is Your Property a Good Candidate for Cost Segregation?

• Is the purchase price of the building at least $750,000?
• Have we purchased, constructed or renovated any property since 1987?
• Do we plan on keeping our property for the next few years?
• Do we have taxable net income?

Whether you're a CPA firm working on behalf of a client or the building’s owner, Scarpello Consulting can help. Simply submit the form on this page to start the process and a member of our team will be in touch.