Cost segregation
Segregation Holding
Segregation Holding provides engineering-based cost segregation studies for commercial property owners, working alongside the owner's CPA. A study reclassifies building components into 5, 7, and 15-year depreciation lives instead of the standard 39-year schedule, accelerating deductions and deferring federal and state income tax.
Eligible property includes buildings purchased, constructed, expanded, or remodeled since 1987, plus rental houses and tenant improvements. The firm states a study is typically cost-effective for buildings purchased or remodeled at a cost greater than $100,000, and that it works on property of virtually all sizes, including hotels, motels and resorts, retail and mixed-use retail, warehouse and industrial, entertainment venues, automotive dealerships, and leasehold improvements.
Each engagement includes three years of follow-up studies and audit protection, which the firm says no other cost segregation firm offers, and it states that none of its studies have been overturned. Prospective clients are offered a free cost-benefit report and preliminary property analysis, described on the site as a $495 value.
The firm also runs a Strategic Alliance Partnership Program for CPAs and other tax professionals. It publishes no fee schedule, and its own writing argues that very cheap online studies carry risk, citing the IRS Cost Segregation Audit Technique Guide on preparer credentials and the value of construction engineering experience.
Best for
Commercial property owners and their CPAs with buildings purchased, built, or remodeled for more than $100,000 since 1987 who want an engineering-based study with follow-up years and audit support included.
What they do
- Engineering-based cost segregation studies
- Free cost-benefit report and preliminary property analysis
- Three years of follow-up studies
- Audit protection and IRS support
- Leasehold and tenant improvement studies
- Retroactive studies on older buildings
- Strategic alliance partnership program for CPAs
Details
| Attribute | Value |
|---|---|
| Method | Engineering-based |
| Minimum basis | None |
| Audit defense included | Yes |
What stands out
- Includes three years of follow-up studies and audit protection with every engagement.
- States that none of its cost segregation studies have been overturned.
- Offers a free cost-benefit report and preliminary property analysis described as a $495 value.
- Says 30% to 90% of the total electrical costs in most buildings can qualify for 5- or 7-year depreciation.
Common questions
- What is a cost segregation study?
- It is a tax strategy for companies and individuals that have constructed, purchased, expanded, or remodeled commercial real estate. Commercial property is normally depreciated over 39 years; a study identifies components that can instead be depreciated over 5, 7, or 15 years, accelerating deductions and deferring federal and state income tax.
- What property is eligible for cost segregation?
- Commercial buildings purchased, constructed, expanded, or remodeled since 1987 qualify, as do rental houses and tenant improvements. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $100,000. Studies are most efficient on new buildings under construction, but can also uncover retroactive deductions on much older buildings.
- Which building components can be reclassified?
- Typical reclassifications cover non-structural elements such as carpet, decorative lighting and trim, dedicated electrical and plumbing, and security systems; exterior land improvements such as landscaping, curbs, sidewalks, fencing, and signage; and indirect construction costs such as architect and engineering fees and construction permits.