Westwood Net Lease Advisors

Cost Segregation “Depreciation”

Cost segregation depreciation is a highly beneficial tax planning strategy utilized by commercial and residential rental real estate owners to accelerate depreciation deductions, defer tax, and improve cash flow. A cost segregation study (CSS) is based on a detailed engineering analysis which identifies construction related costs that qualify for faster depreciation; typically over 5, 7, and 15-years, as opposed to 27.5 (residential rental) or 39-years (commercial).

Don’t Miss Out – Cost Segregation Not Just for New Builds

Although cost segregation depreciation has become routine with newly acquired and constructed facilities, there are many additional applications still being overlooked. In fact, cost segregation can be used throughout the life of a real estate asset.

When Cost Segregation Applies

  • Concept/Feasibility – Acquisition
  • Design/Construction – Redevelopment/Repositioning

My CPA is Already Doing This – Are You Sure?

Taxpayers often believe that their CPA is already taking advantage of this strategy because they have accelerated some costs (carpet, landscaping, etc.). If your CPA brought in a cost segregation engineer, this may be true, but it is usually not the case. What typically happens is the CPA identifies only some of the costs that can be depreciated faster (low-hanging fruit), leaving a great deal of benefit on the table.

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“The benefits of cost segregation, which are relatively unknown by a majority of investors, can be substantial and immediate, especially in recent years with accelerated ‘bonus depreciation.’ Cost segregation is one of the biggest tax benefits available to an investor.”
Jason Simon

Vice President, Westwood Net Lease Advisors

Experience Leads to Cost Savings

The IRS highly recommends that a CSS be performed by someone with significant engineering, construction, and tax experience. The Cost Segregation Audit Techniques Guide specifically states, “A quality study will identify the preparer and always references his/her credentials, experience, and expertise in the cost segregation area.” While there are many firms who profess to have the in-house expertise to provide CSS, the reality is that few do. Experience is critical and leads to cost savings.

If you’d like to find out if you can save money this tax season on your NNN investment, Westwood Net Lease Advisors works nationwide with reputable CSS preparers with referenced credentials and expertise – we would be happy to connect you. Contact us today to learn more – we’re here to help. 314-997-5227

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