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Cost Segregation Defined

Many property owners are increasing their cash flow and receiving immediate tax savings on their commercial properties. They are finding these benefits from an unexpected source: the Internal Revenue Service.

Hundreds of court cases, US Treasury regulations and IRS rulings support Cost Segregation as the correct method of depreciating commercial real estate. Property owners are taking advantage of significant tax benefits by reclassifying real property into personal property through engineering-based Cost Segregation studies. The depreciation of reclassified personal property can be accelerated from 39 years to 5, 7 and 15 years.

According to the IRS, Cost Segregation has become widely recognized as a legitimate, tax-planning strategy, resulting from initiatives to encourage business investment. Thousands of business owners have already taken advantage of these initiatives to reduce their tax liability.

QEAs Cost Segregation services utilize an engineering approach designed to identify and maximize depreciation deductions. Our expertise in performing Cost Segregation studies and our dedication to a national Cost Segregation practice enable us to continue leading the field in IRS-accepted studies.

Industry-leading real estate professionals across the nation are aware that the Cost Segregation industry is presently experiencing explosive growth. Recently, Cost Segregation has become one of the most valuable tax-deferral strategies taking the mainstream commercial real estate community by storm. Tax accountants, general contractors, real estate consultants, brokers and 1031 Exchange firms are increasingly enlisting the services of Cost Segregation firms and finding effective ways to offer Cost Segregation services to their clients.

The IRS has strict guidelines to accepting a legitimate Cost Segregation study on a new or renovated building. A licensed architect, licensed structural engineer or experienced construction estimator, working in conjunction with a licensed engineering firm, generates asset take-offs through a blueprint analysis. The costs are then estimated based upon nationally recognized, cost-estimating procedures acceptable to the IRS.

Most CPA firms are not equipped to perform Cost Segregation studies in-house and must out-source engineering resources. QEA has the in-house expertise necessary to provide full and complete Cost Segregation services to our clients.