Cost Segregation Studies
Cost segregation is an IRS-recognized technique of combining tax and engineering strategies to identify and segregate the costs of “short lived” property from real property. In addition to providing income tax benefits through accelerated depreciation, the results of a Cost Segregation Study may also provide tax benefits by reducing state and local property taxes. Because cost segregation is generally associated with commercial property, any entity owning real estate or leasehold improvements can benefit from a Cost Segregation Study—regardless of the industry.
Andersen Tax cost segregation professionals recognize the time constraints of our clients, and our methodology is designed to minimize time and effort required by clients. Andersen Tax assists taxpayers in segregating assets eligible for a shorter depreciation recovery period—such as land improvements (15 years) and personal property (five or seven years)—from the total costs of its existing and new facilities. The significant tax benefits of a Andersen Tax Cost Segregation Study generally result from the following steps (as necessary):
- Review of capitalized costs and documentation
- Site inspection of the property
- Cost allocation and documentation analysis
- Asset-by-asset tax authority citation
- Computation of understated depreciation and filing Form 3115 (for retroactive studies)
- Audit support
Even if an entity owns facilities purchased or constructed in prior years, a Andersen Tax Cost Segregation Study can be conducted retroactively. Andersen Tax follows established cost and engineering analyses that allow for the identification and estimation of personal property within older buildings without invoices or construction drawings. Our team includes CPAs, tax professionals, and an individual with a Senior Cost Segregation Professional (SCSP) designation as accredited by the American Society of Cost Segregation Professionals.