By undertaking cost segregation studies, commercial property owners can create a competitive advantage in a tight market by increasing their buying power. They also can renovate more extensively because of the resulting short-term positive cash flow.
Cost segregation is the process of taking property that regularly would be depreciated as a 39-year asset & dividing it into five-, seven-, 15- and 39-year assets. For example, 5- and 7-year personal property includes items such as electrical service & distribution to dedicated computer equipment & appliances, plumbing that services dedicated kitchen equipment, & many types of nonstructural furniture, finishes, fixtures & equipment. 15-year land improvements include site utilities, some pools, landscaping, paving, curbs and gutters.
Section 481(a) of the Internal Revenue Code enables property owners to "catch up" past years' incorrect depreciation with a one-year lump-sum adjustment.
A cost segregation study impacts the commercial property’s bottom line. For example, if a property is purchased for $20 million in 2006 (excluding the cost of land), a cost segregation study could conservatively allocate $2.8 million to five-year personal property, $100,000 to seven-year personal property, $1 million to 15-year land improvements, and the remaining $16.1 million to 39-year real property. This allocation would result in a $2,770,481 increase in depreciation,
Why We work with ELB Consulting, Inc.
What makes ELB Consulting so unique in our industry is our construction engineering study methodology. Our experts conducting your study are specialists in engineering, construction, accounting, and tax research and have substantial audit and litigation experience with the IRS. Our team member’s backgrounds draw experience from the medical, electronics, logistics, construction, and cost estimating fields including professional engineers, certified public accountants and contractors. We have extensive work experience in grocery, automotive, manufacturing, medical, apartments, and all aspects of retail.
We pride ourselves in keeping up with the most recent IRS guidelines which include current legislation, regulations, revenue rulings and case law. As a result, our experts provide the most detailed and accepted method approved by the IRS
Key Facts about ELB Consulting:
Meet the Partners of ELB:
ERIC ERNST - Eric's engineering expertise in cost segregation is built upon many years of working directly in the construction industry. Working for Arthur Andersen allowed him the opportunity to be involved in construction audits, claims and dispute litigation, and direct dealings with the IRS. Over the years Eric has established one of the best reputations in the industry and a strong working relationship in cost segregation issues with the IRS.
RANDY LYONS - For the last ten years Randy has focused his efforts on cost segregation and has experience in studies ranging from small office buildings to multi-million dollar manufacturing facilities. Randy has over 30 years of experience in the construction and real estate industry starting as an apprentice and working his way up to a Florida state certified building contractor.
FRANK BUONEMANI - With 16+ years of experience in the commercial real estate and civil engineering industry, Frank is becoming widely recognized as a nationwide expert of engineered cost segregation studies and tax depreciation. Frank has extensive experience in performing cost segregation studies, purchase price allocations, energy tax studies and property tax studies. He has successfully collaborated in numerous cost segregation tax audits.
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