Cost segregation studies provide real estate developers an opportunity to uncover significant tax savings in
any buildings that they may own or have recently constructed or purchased.
As 59 percent of our respondents were unaware of
these benefits, this seems to be an area where many
real estate developers may be missing an opportunity.
By employing a cost segregation study, we have seen
many of our clients have a greater ability to finance a
proposed deal because cost segregation will improve
the cash flow projections that they can present to the
lending institution.
In brief, cost segregation studies utilize an engineering-based approach to classify components of real
property to a lesser depreciation life in order to recognize current, future and permanent tax savings.
The classification of assets placed into service in past
years can be corrected without the need to amend the
prior year’s tax returns. Also, the total depreciation
adjustment identified for all prior years can be fully recognized in the year of change.
