How should Albany commercial property owners react to the recent corrections in property tax?

This article first appeared in the Albany Business Review, where Christie Ellis, President, serves on the Leadership Trust. She is also a frequent contributor to the NY Real Estate Journal, a university and seminar lecturer, and a member of MENSA and the American Society of Cost Segregation Providers (ASCSP).

They should ignore the issue entirely. Really! Though there has been a lot of concern around the corrections, for the commercial property owners, the increase in their property taxes is a non-issue when using a strategy for income tax mitigation called cost segregation

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. Because the increase in property taxes is so much smaller than the amount that can be saved by utilizing cost segregation, owners shouldn’t worry about the increase, but should instead focus on achieving the maximum cost segregation savings.

Cost segregation is an engineering based tax strategy, which means that your accounting team most likely has not utilized this strategy for you. It requires both engineering and tax expertise. It works in harmony with your accounting team and does not replace or compete with your existing tax team. High quality providers work risk free, meaning, you only pay them for their services when they deliver tax savings to you.

Cost segregation is effective for for-profit organizations, which have owned a subject property for less than 15 years, and which plan to own the property for a minimum of 3 years. No matter the owning entity, participation in REITs, or participation in tax exchanges, cost segregation is a significantly overlooked strategy for commercial property owners.