Cost Segregation

Overview

As an IRS-approved income tax strategy, cost segregation is one of the most valuable real estate services for commercial property owners, offering the opportunity to accelerate the depreciation of certain assets and increase cash flow. Since 1994, The Ambrose Group has strived to maximize the profitability of its clients. As a trusted adviser, we guide you through the process of reclassifying your real estate assets to reduce your tax liability. A Cost Segregation Study will accelerate the depreciation of your building from a standard 39-year depreciable life to a 5-, 7-, or 15-year life.

Cost Segregation Overview
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Do You Qualify?

Virtually every taxpayer who owns, constructs, renovates, or acquires a commercial real estate facility stands to benefit from having a Cost Segregation Study performed. This study may also assist in reclaiming missed deductions from prior years. Property owners with the following criteria experience the most benefits:

  • =$500,000 in acquisition or construction
  • =$200,000 in renovations

Why Choose The Ambrose Group For Cost Segregation

The Ambrose Group Stands out as a trusted real estate company for several compelling reasons:

  • Experience and Expertise: This is what we do. Utilizing an inhouse construction engineer and our ability to value the land component of your property, we offer a more wholistic approach to your cosst segregation study. Whether it’s residential or commercial, we bring a wealth of knowledge to every cost segregation report we produce.
  • High-Quality Standards: We adhere to the highest industry standards, ensuring that our studies are precise and dependable. Our commitment to accuracy sets us apart from our competition.
  • Compliance and Audit Support:
    • IRS Compliance: We adhere to IRS-approved methodologies, such as the Cost Segregation Audit Techniques Guide.
    • Audit Support Guarantee: The Ambrose Group offers support in the event of an IRS audit.
    • Documentation: Our reports provide detailed information regarding the property, our methods in coming to a concluded value.  as well as the necessary information for IRS compliance.
  • Certified Public Accountant Collaboration:
    • The Ambrose Group considers CPAs as the experts in tax strategies. We work closely with them to ensure our studies integrate seamlessly into the overall tax plan.
    • With transparency in mind
  • Client-Centric Approach: At The Ambrose Group, client satisfaction is paramount. We maintain clear communication throughout the analysis process, fostering transparency and trust.
  • Comprehensive Services: From commercial properties to investment residential homes, we offer a full range of services to meet all your real estate valuation needs.
Ambrose Group For Cost Segregation

The Ambrose Group Cost Segregation Process

Engaging in a cost segregation study is time-sensitive, and we’ve gained our client’s trust by clearly communicating each step of the process. Our thorough approach ensures precise, compliant, and customized cost segregation studies to meet your needs.

Determine the Scope of Work

We begin by understanding the purpose of the cost segregation study—whether it’s for tax planning, acquisitions, or financial reporting. The scope is tailored to suit the property type and specific tax requirements.

  • Property Inspection: Our certified professionals conduct a detailed site visit, evaluating both the building’s structure and components. We document everything through photos and measurements to identify assets eligible for accelerated depreciation.
  • Data Collection: We gather key property details, including cost, age, and construction features. A comprehensive market analysis and review of your building’s assets are also conducted to maximize tax benefits.

Evaluation & Analysis

  • Asset Classification: We identify and classify all components of the property that qualify for accelerated depreciation.
  • Depreciation Schedule: We apply IRS-compliant methods to reclassify assets from long-term (39-year) to shorter-term (5, 7, or 15-year) depreciation schedules.
  • Tax Benefit Calculation: We calculate the potential tax savings based on the accelerated depreciation of eligible assets.
  • Valuation Process: Combining asset classification and tax code compliance, we determine the total amount of assets eligible for accelerated depreciation. Adjustments are made to ensure accuracy and compliance.
  • Report Preparation: A detailed cost segregation report is prepared, including an executive summary, asset classification breakdown, and tax-saving calculations. The report undergoes thorough internal review to ensure accuracy and IRS compliance.
  • Delivery & Client Communication: The final cost segregation report is delivered promptly. We provide ongoing support to explain the findings, answer questions, and assist with implementation. Follow-up services are available for future tax audits or asset re-evaluations.

By following this detailed and client-focused process, The Ambrose Group ensures that every cost segregation study is accurate, compliant, and maximizes your tax benefits.

The Process Of Residential Real Estate Appraiser Services At The Ambrose Group

Case Studies

Details:

  • Purchase price: $2,900,000
  • Building size: 10,500 sq ft commercial building
  • Construction year: 2019

Results:

  • Increase in depreciation in the first year: $657,692
  • First-year tax savings: $230,192
  • Total tax benefit: $140,260

This case study is a prime example of the benefits cost segregation can unlock for commercial property owners.

Bonus Depreciation

Bonus depreciation allows businesses to immediately deduct a large percentage of the purchase price of eligible assets. When combined with cost segregation, this strategy can significantly enhance tax savings and increase cash flow in the early years of property ownership. Our team will help you understand and apply bonus depreciation to maximize your financial benefits.

FAQ About Cost Segregation

What is cost segregation?
Cost segregation is an IRS-approved tax strategy that accelerates the depreciation of certain assets within a commercial property, resulting in increased cash flow.
Who can benefit from a cost segregation study?
Virtually any taxpayer who owns, constructs, renovates, or acquires commercial real estate can benefit, especially those with significant investments in their properties.
How does cost segregation increase cash flow?
By accelerating depreciation, property owners can reduce their taxable income in the early years of property ownership, leading to significant tax savings and increased cash flow.
What properties qualify for cost segregation?
Most commercial properties, investment residential properties including new constructions, renovations, and acquisitions, qualify for cost segregation.
How long does a cost segregation study take?
The duration varies based on the property’s complexity, but most studies are completed within two to four weeks.
How is a cost segregation study conducted?
A study involves a detailed analysis of the property to identify and reclassify assets for accelerated depreciation, including a review of construction documents, site visits, and cost estimation.
What are the benefits of combining cost segregation with bonus depreciation?
Combining these strategies allows for immediate deduction of a large percentage of the purchase price of eligible assets, significantly enhancing tax savings and increasing cash flow.
Can I apply cost segregation to older properties?
Yes, cost segregation can be applied to older properties, and it may help reclaim missed deductions from prior years.
How much does a cost segregation study cost?
Costs vary based on the property’s size and complexity but typically range from a few thousand to several thousand dollars.
How can I prepare for a cost segregation study?
Provide detailed information about your property, including construction documents, financial records, and any relevant data, to support the analysis.

Contact Trusted Real Estate Consultants

We live by our motto: “Everything we do is driven by the relationship, not the transaction,” and we mean it. Whether you have a question about our services or need expert advice, we’re here to help. Please fill out this small form, and we’ll be with you shortly. For more information, contact our real estate firm.