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The 12 questions you
should ask your Cost
Segregation specialist
The Cost Segregation
Group offers answers to
the questions many
people are asking before
they get involved with a
cost segregation study.
For those looking to get
involved with the Cost
Segregation Group here
are some things to know
about cost segregation
studies.
1) The first of many
questions people ask is
how long does it take
the Cost Segregation
Group to complete a cost
segregation study?
A: From the time we
receive all of the
appropriate
documentation, a cost
segregation study
normally takes about 60
days.
2) What
material is needed for
the Cost Segregation
Group to complete a cost
segregation study?
A:
Ideally, we would like a
full set of construction
plans, final AIA
application and
certification for
payment document or
other cost information,
current tax depreciation
records, building cost
budget information,
change orders, direct or
indirect costs paid by
the owner not included
in other documents, and
other information
depending upon the
project.
3) But
what if you don’t have
all the necessary
materials, can a cost
segregation study still
be performed?
A:
Yes, the Cost
Segregation Group’s
accounting and
engineering specialists
can do an extensive site
visit. They will
measure and estimate
using current accepted
costing techniques and
pricing guides to
determine the costs that
qualify for shorter
recovery life periods.
4)
Can I use my own
engineers and
accountants?
A:
From our experience, it
is most beneficial and
cost efficient for us to
use specialists who are
familiar with and
specialize in cost
segregation work. They
understand the
components that qualify
and know how to document
and substantiate their
work. Consequently,
their work also better
withstands IRS scrutiny
and they are able to
assist with any IRS
challenges.
5)
What about the cost of a
feasibility study?
A:
Simple, a feasibility
study is free.
6)
Can the Cost Segregation
Group to explain the
concept of Net Present
Value (NPV)?
A:
Net present value is the
calculation of the
present value of tax
savings achieved over a
39-year or 27.5 year
depreciation period
(life of the asset).
7)
Another popular set of
questions is if my
current CPA can do a
cost segregation study
for you? And, can the
Cost Segregation Group
work with my current CPA
to get a cost
segregation study done?
A:
Not all CPAs are
experienced in cost
segregation work. If
your CPA is not
experienced in this
area, we will gladly
work with them on a
consulting basis to
complete the work for
you. We currently have
relationships
established with several
firms who call us in to
do this type of work for
their clients without
fear of our assuming
their client
relationship.
8)
Do my chances of being
audited increase once a
cost segregation study
is completed on my
property?
A:
It is difficult to know
what might trigger an
audit. In our
experience, the chance
of being audited does
not substantially
increase after a cost
segregation study.
9)
Will professionals at
the Cost Segregation
Group be available to
assist in the event of
an audit?
A:
Yes, The Cost
Segregation Group will
be available to assist
in the event of an
audit. In doing the
cost segregation study
our focus is to create
documentation and
support for our
conclusions so that they
are easily communicated
and resolved with the
IRS.
10)
What does a cost
segregation study cost?
A:
We charge a fixed fee
for cost segregation
studies, so you know the
total cost of the study
upfront. The fee can be
impacted by how large or
small the real estate
project is. In
addition, the location,
accessibility, and
quality of the records
and documents impact the
ultimate cost.
11) What
items are classified as
personal property in a
cost segregation study,
does that increase my
personal property tax?
A:
In general, a cost
segregation study will
not impact personal
property
classifications. The
work done in a cost
segregation study is for
depreciation purposes
only. The
classification for
depreciation purposes
does not change how the
property is classified
under the personal
property tax laws of the
jurisdiction where the
property is located.
However, we would
recommend a review of
the applicable personal
property statute.
12)
Who do I call for more
information?
A:
For more
information on cost
segregation studies,
contact Cathy Harris at
The Cost Segregation
Group at 757-533-4118 or
email
charris@costsegregationgroup.com
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