Cost Segregation Service

Cost Segregation is a strategic tool that allows companies and individuals to increase their cash flow by maximizing depreciation benefits for tax purposes. It analyzes the capital investments made in a residential or commercial building that results in the correct classification of costs between real and personal property for the purpose of determining tax deductions for depreciation.

This service will identify, segregate, and reclassify components of a project into asset classes that can be depreciated over shorter time periods by using methods that accelerate the amount of the deductions for tax purposes. The tax savings realized by accelerating the depreciation of these assets generates increased cash flow.

Are you eligible for Cost Segregation?

The best time to begin a Cost Segregation is when you start the planning process for your project, however, eligibility extends to:

• Renovations or additions after 1986
• Buildings or facilities constructed before 1986, that have been acquired in a taxable transaction after 1986
• New construction of buildings and facilities since 1987

The costs to be segregated include the actual direct costs of construction or acquisition and the indirect or “soft costs” such as legal, architectural, engineering fees, appraisals, construction management costs, etc. The second step is to classify the assets based on the appropriate depreciable lives for income tax purposes. By identifying, segregating, and reclassifying costs related to the property depreciation can be taken over a much shorter time frame.

Benefits of Cost Segregation:

• Increases cash flow
• Maximizes tax credits
• Reduces income taxes, and may reduce real estate taxes and personal property taxes
• Provides an opportunity to clam "catch up" depreciation on previously misclassified assets
• Provides information that is valuable in manging capitalized assets
• Bonus depreciation for newly acquired personal property in addition to regular depreciation deductions

KAF’s professional staff has extensive knowledge and experience conducting cost segregation services. We will help you to realize the maximum benefits of cost segregation.

For more information on cost segregation studies or to learn how your company may benefit please contact:

Kenneth Kirkland, CPA, MST
E-Mail: kkirkland@kafgroup.com
Phone 781-817-1104