Cost Segregation and Bonus Depreciation Services - MRV Consulting

Cost Segregation

Services

Types of properties that benefit from a cost segregation study:

 

Any business that has recently acquired improved real estate or constructed new improvements can likely reduce its taxable income for several years by segregating the property by type and depreciation rate. Typically, properties placed in service within the last 10 years are ideal candidates for retroactive cost segregation studies.

 

Our vast experience ranging from skyscrapers, such as the Sears Tower and the General Motors Building, to hospitals, regional and neighborhood shopping centers, gives us the ability to perform a cost segregation study customized according to your property. 

HOTELS
AND
RESORTS
HOSPITALS
AND
HEALTHCARE FACILITIES
DATA CENTERS
DISTRIBUTION CENTERS
AND
WAREHOUSES
MANUFACTURING
FACILITIES
BAR, LOUNGES,
AND
RESTAURANTS
FITNESS CENTERS, GYMS,
AND
HEALTH CLUBS
GOLF COURSES
AND
COUNTRY CLUBS
OFFICE BUILDINGS AND
LEASED SPACES
RETAIL STORES
CASINOS
GROCERY STORES
AND
SUPERMARKETS
RESIDENTIAL
RENTAL
APARTMENTS
INDUSTRIAL
FACILITIES
SHOPPING MALLS
AND
STRIP CENTERS
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CONTACT
Mark_Rodriguez_short.jpg

Mark Rodriguez, ASA MRICS

Founder & Managing Partner

Tel: +1 (732) 780-6000

MRV@MRValuation.com

Cost Segregation

What is Cost Segregation?

A cost segregation study is a strategic tax savings tool that identifies certain qualified personal property and land improvements that are eligible for shorter depreciation lives and bonus depreciation to satisfy tax reporting requirements.  It allows companies and individuals that have constructed, purchased, expanded, or remodeled any kind of real estate to increase cash flow and ROI by accelerating depreciation deductions and deferring federal and state income taxes.

 

Bonus Depreciation: Tax Cuts and Jobs Act (TCJA)

 

The Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2017, is the largest overhaul of the tax code since the Tax Reform Act of 1986.  The changes related to the tax treatment of building construction, building improvements, and building acquisition costs provide taxpayers with new opportunities to maximize tax benefits through a cost segregation study.

 

Bonus Depreciation — TCJA allows qualifying assets with tax recovery period of 20 years or less, new and used, to now qualify for the 100% bonus depreciation provision in the assets’ first year of service.  While the term “bonus” is often misunderstood as an added benefit beyond the asset’s depreciable tax base, it is a boost to accelerate the tax depreciation in the first year the asset is placed in service.  In prior years, bonus depreciation existed but only for new construction and some acquired assets (at 50% in 2017).  Therefore, tangible personal property, either newly acquired or constructed, will qualify for bonus depreciation. 

How it benefits you? 

 

The shorter depreciation lives accelerate depreciation on the property, which reduces the tax burden in the early years of an investment, thus accelerating the cash flows associated with higher tax deductions and boosting ROI.

 

Cost segregation does not eliminate taxes owed but can defer them until later years, resulting in significant savings today. The after-tax savings are commonly as much as 20 to 50 times the price of the cost segregation study. The steps required to accomplish this include a detailed identification of a facility's components, appropriate classification of each component or property unit for tax purposes, and determination of the cost of each unit.

 

 

The MRV Consulting Methodology

Our team of designated cost segregation consultants, appraisers, and engineers analyze the assets, identify the portions that can be treated as personal property,  and properly allocate actual capital expenditures, including new and renovation costs, into their appropriate cost recovery periods.

 

A cost segregation analysis performed by MRV Consulting identifies and segregates assets that qualify as tangible personal property, other tangible property, land improvements, and real property.

The new bonus depreciation rules under TCJA make cost segregation studies more beneficial than ever! Let's talk >

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