Cost segregation provides cashflow and income tax savings to owners of all types of commercial real estate and buildouts, by accelerating depreciation, decreasing taxable income. If you own commercial real estate – whether multi-family property, leasehold improvements, office renovation, distribution center, medical offices or facilities or even ski resorts and golf courses – you should be using cost seg.

Great CPAs serve as quarterback for all financial matters effecting a company’s health. As a tax strategy, cost segregation is not performed by general business CPAS, though we do partner with and augment their tax mitigation work for their clients. Cost segregation requires both in depth engineering and niche tax knowledge - not something most CPAs possess.

Cash flow. For many business owners in 2020, this is the single term that has kept them up at night. With paycheck protection plan (PPP) funds expired, grant competition fierce and loan opportunities reduced for those with the most need, the refrain business advisors are hearing from their clients, no matter the industry, is “What should we be doing right now?”

Hiding in plain sight is a strategy that 90% of eligible businesses are not considering. It’s a strategy that is so useful and effective that Congress explicitly increased it within the Coronavirus Aid, Relief and Economic Security (CARES) Act legislation.

Let’s start with tax assassin – that’s a pretty bold claim.

It is! Partly I like saying it because it’s fun to imagine yourself a superhero. But I also like saying it because it accurately depicts how I help commercial property owners. We typically provide clients with income tax reduction equal to 3-8% of the value of their building, for leaseholders, we save as much as 20%! Assassins are also sort of mysterious – and I think that’s a great analogy for cost segregation. It is so underutilized that less than 10% of eligible property owners are using this strategy. ***since this article was published, savings opportunities have increased to as much as 30%

Cost segregation provides on average, 3 - 8% of the value of your property, but in some cases as much as 20%, in income tax reduction. It is useful to owners of commercial real estate, and to owners of leasehold improvements. Commercial buildings of any type – warehouse, hotel, restaurant, hospital, gas station, residential rental, etc. all benefit.

Let’s imagine a commercial property had a cost of $2,000,000, whether it was built or purchased. No matter the property type, whether a warehouse, an office building, a residential rental building, or something else, cost segregation will provide an income tax savings of between $60,000 - $160,000.