What Is Cost Segregation?

What Is Cost Segregation?

What Is Cost Segregation?

Cost Segregation is an application by which commercial property owners can accelerate depreciation and reduce the amount of taxes owed. A cost segregation study is a federal income tax tool that increases your near-term cash flow in the form of a tax deferral. In a study, the parts of your building that qualify for shorter recovery periods are identified, quantified, and classified to produce additional depreciation deductions which reduce the amount of taxes owed. Tami Simko of CSSI® provides cost segregation services to commercial property owners so they can significantly increase their cash flow.

For starters, it's not a loophole. Once used only by the largest accounting firms and real estate owners, this practice has now become routine for commercial and residential properties of almost every size. Cost Segregation is the preferred method of accelerating depreciation to significantly reduce taxable income and increase cash flow.  However, most Tax Professionals do not do Cost Segregation because it’s not an accounting specialty, and they simply do not have the expertise to do a study correctly in accordance with US Tax Code guidelines to get the full tax benefit. 

How Does Cost Segregation Work?

At CSSI®, we create an engineering-based cost segregation study by identifying and placing your buildings components in their proper, (and shorter) 5, 7 and 15 year class lives rather than on a typical 39 year life in the case of commercial property and 27.5 years for residential rental property. This proven strategy can reduce income taxes up to $75,000 for every $1,000,000 in building cost basis owned. We analyze all supporting documentation and complete a site visit on each property. Our report is the supporting document that allows your tax professional to take the missed tax benefit in the current tax year, without amending past returns. We speicalize in partnering with your tax professional to get this done effieciently and accurately and have completed over 30,000 studies for clients in almost every industry, from office buildings, retail stores, warehouses, AIRBnB's, apartments, self-storage, and many many more.

CLICK HERE FOR FREE ESTIMATE

The Benefits of Getting Cost Segregation Services from CSSI® 

✔ An immediate increase in cash flow

✔ A reduction in current tax liability

✔ The deferral of taxes

✔ The ability to reclaim missed depreciation deductions from prior years (without having to amend tax returns).

✔ A dedicated CSSI® Representative, Tami Simko

Three Simple Steps to Stop Overpaying Income Taxes Through Cost Segregation

Step 1: Analyze

Request your complimentary CSSI® Property Analysis. This is a preliminary review that includes:

✔ Increased cash flow analysis

✔ Net present value of the savings

✔ An associated cost and simple process outline to complete the study

✔ Icon of a report with charts and graphs

Step 2: Review

Upon engagement, CSSI® will:

✔ Consult with you and your tax professional regarding your tax savings

✔ Evaluate the building’s construction costs by component and building systems

✔ Review all construction documents, including blue prints, as-built drawings, demolition plans, and available project specifications

✔ On-site inspection and walk-through to photographically document building components, systems, site improvements, and any renovations

✔ Concept icon of success with a mountain with a flag on top

Step 3: Complete

Your CSSI® Study is performed and completed within approximately six weeks. This includes:

✔ Reclassifying each building component into more appropriate tax lives as prescribed by IRS guidelines

✔ Allocating indirect costs to each asset

✔ Delivering a written report with the asset detail supporting the reclassification and completion of the necessary tax forms

✔ Assisting your tax professional in the completion of all applicable tax forms

How We Help Tax Professionals with Cost Segregation Studies

At CSSI®, we believe that most tax professionals would love to offer more services to their clients. We know you continually look for additional benefits for your clients and provide them opportunities for increased cash flow. Not only does this provide enhanced client service and loyalty, but it shows your client that you are looking out for their business interests. We understand the demands of your practice and the busy world of public accounting.

Put More Money In Their Pockets With A Cost Segregation Study

At CSSI®, our goal is to simplify the process for you so that your involvement in our study process is minimal. We will either coordinate with you and your client or work directly with your client to secure all necessary documentation to complete the study. We also provide you with cost documents, the 3115, and 481(a) adjustments. By partnering with CSSI®, you will be working with a firm that operates within all approved U.S. tax codes and guidelines.

Section 179D Energy Efficiency Deduction

Unlock Up To $5.81 Per Square Foot in Energy Tax Deductions

Enhance your building’s energy efficiency to qualify for significant tax savings under Section 179D. Commercial properties that meet federal energy standards through improvements to lighting, HVAC, or building envelope systems can receive up to $5.81 per square foot in tax deductions.

Maximum Tax Benefit 

You can receive up to $5.81 per square foot in immediate tax deductions for qualifying buildings.

Retroactive Claims

Eligible for buildings placed in service since 2006, with no need to amend prior returns.

Multiple Building Systems 

Eligibility can be achieved through improvements to lighting, HVAC, or the building envelope.

No Project Size Limit 

This deduction is available for both new construction and renovation projects of any scale.

How Does the Section 179D Deduction Process Work for Building Owners and Contractors?

1. Preliminary Analysis – Free Building Assessment Our team reviews your building's specifications, energy systems, and design documentation to determine your eligibility. We provide a preliminary estimate of the EPAct 179D energy-efficient commercial building tax deductions based on your property’s square footage and improvements.

2. Engineering Modeling – Engineering Certification Using IRS-approved software, our engineers conduct detailed energy modeling to ensure your building meets federal energy tax deduction requirements. We analyze systems such as lighting, HVAC, and the building envelope to document energy performance improvements.


3. Implementation  – Tax Benefits Secured We provide a comprehensive certification package, including energy analysis results, supporting calculations, and the necessary IRS documentation. This enables you and your tax professional to claim the maximum eligible deduction for your property


How Does the Section 179D Deduction Process Work for Building Owners and Contractors?

1. Preliminary Analysis – Free Building Assessment Our team reviews your building's specifications, energy systems, and design documentation to determine your eligibility. We provide a preliminary estimate of the EPAct 179D energy-efficient commercial building tax deductions based on your property’s square footage and improvements.


2. Engineering Modeling – Engineering Certification Using IRS-approved software, our engineers conduct detailed energy modeling to ensure your building meets federal energy tax deduction requirements. We analyze systems such as lighting, HVAC, and the building envelope to document energy performance improvements.

3. Implementation – Tax Benefits Secured We provide a comprehensive certification package, including energy analysis results, supporting calculations, and the necessary IRS documentation. This enables you and your tax professional to claim the maximum eligible deduction for your property

Research & Development (R&D) Tax Services

Benefits of Research and Development (R&D) Tax Credit Services

The Research and Development (R&D) Tax Credit rewards businesses that innovate by developing new products, processes, or technologies. Our technical analysis identifies qualifying research activities within your organization, potentially resulting in significant dollar-for-dollar tax reductions that can be claimed retroactively and carried forward for up to 20 years.

Direct Tax Reduction

Receive a dollar-for-dollar reduction in your tax liability, offering a greater impact than deductions alone.

Retroactive 

Claim credits for qualifying R&D activities from the past three tax years.

Payroll Tax Offset

Eligible startups can apply up to $500,000 in R&D credits against payroll taxes.

Future Flexibility

Any unused credits can be carried forward for up to 20 years to offset future tax liabilities. 

How Does the R&D Tax Credit Claim Process Work? 

1. Preliminary Analysis – Free Qualification Review We assess your business activities, technical development processes, and expenditures to determine eligibility. A no-cost initial assessment helps estimate the available tax credits.

2. Technical Review – Activity Documentation Our team works with key personnel and reviews project documentation to identify qualifying research activities. We calculate eligible wages, supply costs, and contractor expenses that support your R&D efforts.


3. Implementation – Credit Delivery We provide a comprehensive report outlining all qualifying activities and expenditures, complete with detailed calculations and supporting documentation. This ensures you can confidently claim your credit with the IRS.


How Does the R&D Tax Credit Claim Process Work? 

1. Preliminary Analysis – Free Qualification Review We assess your business activities, technical development processes, and expenditures to determine eligibility. A no-cost initial assessment helps estimate the available tax credits.


2. Technical Review – Activity Documentation Our team works with key personnel and reviews project documentation to identify qualifying research activities. We calculate eligible wages, supply costs, and contractor expenses that support your R&D efforts.

3. Implementation – Credit Delivery We provide a comprehensive report outlining all qualifying activities and expenditures, complete with detailed calculations and supporting documentation. This ensures you can confidently claim your credit with the IRS.

How Does the R&D Tax Credit Claim Process Work? 

1. Preliminary Analysis – Free Qualification Review We assess your business activities, technical development processes, and expenditures to determine eligibility. A no-cost initial assessment helps estimate the available tax credits.


2. Technical Review – Activity Documentation Our team works with key personnel and reviews project documentation to identify qualifying research activities. We calculate eligible wages, supply costs, and contractor expenses that support your R&D efforts.


3. Implementation – Credit Delivery We provide a comprehensive report outlining all qualifying activities and expenditures, complete with detailed calculations and supporting documentation. This ensures you can confidently claim your credit with the IRS.

Green Zip Tape

Cash Tax Benefits

Switching the drywall tape in your project to Green Zip® can substantially speed up the depreciation of non-load bearing walls, resulting in Cash Tax Benefits of $5 to $15+ per square foot of floor area.

Property Depreciation

Commercial buildings and residential rental properties have a depreciable lifespan of 39 years and 27.5 years, respectively. This applies to the permanent structural components of the building for tax purposes. 

Nonstructural Personal Property

Using Green Zip to construct interior walls reclassifies these assets as nonstructural Personal Property, which has a much shorter recovery period — either five or seven years. 

Benefits 

Green Zip®’s patented technology enables non-load bearing drywall partitions to be removed, relocated, and reused in both new construction and renovation projects. This offers an environmentally responsible and sustainable alternative to demolishing the interior space of buildings.

Promote Sustainable Practices

Green Zip® Tape can contribute significantly to LEED certification, with the potential to earn up to 17 direct LEED credits and 8 indirect LEED credits.

Profitable

The U.S. Senate, in Senate Report #95, clearly stated that "movable & removable partitions are tangible personal property and not a structural component," qualifying them for a shorter depreciation life than traditional drywall. This allows for a 5-year or less depreciation period instead of the 27.5 years (for residential rental properties) or 39 years (for commercial buildings). In PLR-110197-13, the IRS also relied on Senate Report #95 in affirming that demountable, zip-type drywall partitions are considered personal property

Benefits 

Green Zip®’s patented technology enables non-load bearing drywall partitions to be removed, relocated, and reused in both new construction and renovation projects. This offers an environmentally responsible and sustainable alternative to demolishing the interior space of buildings.

Promote Sustainable Practices

Green Zip® Tape can contribute significantly to LEED certification, with the potential to earn up to 17 direct LEED credits and 8 indirect LEED credits.

Profitable

The U.S. Senate, in Senate Report #95, clearly stated that "movable & removable partitions are tangible personal property and not a structural component," qualifying them for a shorter depreciation life than traditional drywall. This allows for a 5-year or less depreciation period instead of the 27.5 years (for residential rental properties) or 39 years (for commercial buildings). In PLR-110197-13, the IRS also relied on Senate Report #95 in affirming that demountable, zip-type drywall partitions are considered personal property

CLICK HERE FOR FREE ESTIMATE

Let CSSI® provide you with an engineering-based cost segregation study to increase your cash flow significantly. For more information, or to schedule a consultation and get a free estimate, call us at 866-799-2774.