Cost Segregation Studies

Cost segregation is an engineering-based approach to identifying assets within a building that can be reclassified to a shorter depreciation class than the building itself. Real property (and everything in it) is generally depreciated using a straight-line method over 27.5 years for residential and 39 years for commercial. The cost segregation specialist maximizes the inherent tax benefit by identifying, classifying and segregating the personal property and land improvement components of the building, resulting in depreciable lives of five, seven, and fifteen years using accelerated depreciation.

There are significant benefits that may result from a cost segregation analysis, including, increased cash flow, deferral of income taxes, reduced real estate taxes, reduced monthly sales/use tax cost, reduced insurance coverage, and Section 179 benefits.

Smolin Lupin offers a multidisciplinary team with engineering, tax and accounting expertise to efficiently conduct these studies. It begins with a team of engineering cost segregation specialists on the ground reviewing invoices, leasehold improvements, site plans, specifications and construction drawings, real estate and property tax assessment records, etc. Our accounting professionals then do an asset allocation and recompute depreciation. With results in hand, the client then authorizes our tax professionals to prepare and file Form 3115 with the Internal Revenue Service.

Our work is documented in a detailed report for the client and Smolin Lupin stands ready to defend the client’s position before taxing authorities, if required.

Our Cost Segregation Studies Specialists:

Richard (Rich) Boyd

Nancy S. Kridel