Frequently Asked Questions About Cost Segregation Studies
Q: What is a cost segregation study?
A: A cost segregation study is a detailed analysis of the costs associated with a commercial or residential property. It helps identify and reclassify certain assets within the property in order to maximize the deductions for federal income tax purposes. This results in significant tax savings for the property owner.
Q: Why should I have a cost segregation study performed on my property?
A: By having a cost segregation study performed, you can take advantage of accelerated depreciation deductions on certain assets within the property, such as electrical wiring, plumbing, and HVAC systems. This can result in significant tax savings for the property owner. Additionally, cost segregation studies can also help identify potential errors or oversights in the original construction cost estimates, which can further increase your tax savings.
Q: What types of properties are eligible for a cost segregation study?
A: Almost any commercial or residential property that has been constructed, renovated, or expanded after 1987 is eligible for a cost segregation study. This includes apartments, hotels, office buildings, warehouses, medical facilities, and more.
Q: How long does a cost segregation study take to complete?
A: The length of time it takes to complete a cost segregation study can vary depending on the size and complexity of the property. Typically, it takes 4-8 weeks to complete a study.
Q: How much does a cost segregation study cost?
A: The cost of a cost segregation study can vary depending on the size and complexity of the property, as well as the experience and qualifications of the firm performing the study. At Saba Tax Advisory, our cost segregation studies are priced competitively and we work with our clients to customize our services to meet their specific needs and budget.
Q: Can I still do a cost segregation study if I have already filed my taxes for the year?
A: Yes, you can still do a cost segregation study even if you have already filed your taxes for the year. In fact, it's a great idea to have a cost segregation study done even after you've already filed your taxes, as it can help identify potential errors or oversights in your original tax filing and help you claim additional deductions.
Q: Are there any specific industries that benefit the most from cost segregation studies?
A: Cost segregation studies can provide significant tax savings for property owners across a wide range of industries, such as hotel and hospitality, healthcare, retail, and more. However, certain industries such as construction, real estate development, and property management companies tend to have a higher percentage of assets that can be reclassified and accelerated.
Q: I'm interested in having a cost segregation study done on my property. How can I get started with Saba Tax Advisory?
A: We're glad to hear that you're interested in having a cost segregation study done on your property. To get started, simply contact us at Saba Tax Advisory, and one of our experienced professionals will be happy to answer any questions you may have, and provide you with a free consultation. We will evaluate your property, and provide you with a detailed report that outlines the potential tax savings you can expect from a cost segregation study.
Q: Can a cost segregation study be performed on an older property?
A: Yes, a cost segregation study can be performed on properties that were constructed or acquired before 1987, although the tax benefits may be limited. The Tax Cuts and Jobs Act of 2017 introduced the Qualified Improvement Property (QIP) provision which allows for the immediate expensing of certain improvement made to buildings placed in service before January 1, 2018. A cost segregation study can help identify and classify these assets to take advantage of the QIP provision.
Q: Will a cost segregation study affect my property's value?
A: No, a cost segregation study does not affect the value of your property. It simply helps you identify and reclassify certain assets within the property in order to maximize the deductions for federal income tax purposes.
Q: How often should I have a cost segregation study performed on my property?
A: A cost segregation study should be performed whenever there is a change in the property, such as a renovation, expansion, or new construction. Additionally, it's a good idea to have a study done every few years in order to stay up-to-date on any changes to the tax laws and to ensure that you are taking advantage of all available deductions.
Q: Will a cost segregation study be audit-proof?
A: While a cost segregation study is based on sound engineering and tax principles, no study or tax position can ever be considered "audit-proof." However, a cost segregation study completed by a reputable firm such as Saba Tax Advisory will provide a well-supported and defensible tax position.
Q: Can I do a cost segregation study myself or should I hire a professional?
A: While it's possible to do a cost segregation study yourself, it's highly recommended that you hire a professional who has the necessary knowledge, experience and qualifications to perform the study correctly. An experienced professional will be able to identify all the assets that qualify for accelerated depreciation, and classify them correctly to maximize your tax savings. At Saba Tax Advisory, our team of experts have the knowledge and experience to provide you with the most accurate analysis and the highest level of service.
Q: What are the benefits of working with Saba Tax Advisory for my cost segregation study?
A: Saba Tax Advisory specializes in cost segregation studies and our team of experts have the knowledge and experience to provide you with the most accurate analysis and the highest level of service. Additionally, we will work closely with you to understand your unique situation and tailor our services to meet your specific needs. Our goal is to ensure that you receive the maximum tax benefits possible and help you make informed decisions about your property.
The information provided in this blog is intended for general information only, and is not meant to constitute tax advice.