Real Estate Cost Segregation
Your company’s real estate holdings constitute a huge capital investment. A cost segregation study can help you accelerate depreciation tax deductions, enhancing your property’s financial return. BKD’s cost segregation professionals identify portions of a building’s cost that can be allocated to shorter depreciable lives (generally five, seven or 15 years) as opposed to the standard 27.5- or 39-year life. This reclassification allows the building owner to accelerate depreciation, defer income tax and increase cash flow.
A cost segregation study can generate tax savings from:
- New buildings or buildings currently under construction
- Existing buildings undergoing renovation or expansion
- Newly purchased existing buildings
- Tenant leasehold improvements
While the tax benefit resulting from a cost segregation study is dependent on the individual property and taxpayer, clients routinely receive present value cash flow savings of 10 or more times their investment for the cost segregation study.
Prior-Year Real Estate Transactions
Cost segregation also is available for real estate transactions from previous years. Under current IRS rules, you can perform a cost segregation study on a building purchased, built or improved in a prior year and “catch up” the additional depreciation in the current tax year. Amended tax returns are not required, and it is not unusual to see significant current-year tax benefits from real estate transactions that took place up to 15 years ago.
BKD’s Cost Segregation Experience
BKD performs hundreds of cost segregation studies every year, and we have a team of engineers on staff fully dedicated to this service. These engineers generate millions in tax savings every year for clients who have bought, built or improved commercial real estate. In addition to our own clients, more than 150 other firms use the BKD cost segregation team to assist their own clients through our Strategic Alliance Program.
Quality Cost Segregation Report
Your BKD cost segregation report is designed to meet or exceed IRS guidelines. These reports include a complete “audit trail,” tracing derived unit costs from contract documents and other source data. Your BKD cost segregation report is designed to withstand IRS scrutiny while helping to generate significant tax benefits.
BKD offers a no-fee feasibility analysis to help you determine the tax benefits available through cost segregation. Complete the form below and we can provide you an estimate of the tax benefits and fee for a cost segregation study on your building.