Imagine paying $299 and generating $10,000 in additional depreciation deductions. In a 40% tax bracket, this is $4,000 cash in your pocket! You might be thinking this is too good to be true, but we see it all the time. It’s called a cost segregation study.
What is a Cost Segregation Study?
Cost segregation studies are used to accelerate depreciation deductions by shortening the useful life of real estate components.
A formal cost segregation study requires the use of a cost segregation professional with an engineering background. Extensive experience is necessary to analyze and apply the various tax laws to the building components.
So what does a formal study cost?
So herein lies the problem. Because of the extensive requirements, many cost segregation reports will cost thousands of dollars and it is not unusual to see reports exceed $10,000.
The result is that it just did not make sense for owners of small rental properties to get reports. So cost segregation studies were typically reserved for large commercial projects. But not anymore.
Here is where Simple SEG comes in
At Simple SEG, we utilize a depreciation model based on a database of engineered cost segregation studies. We are able to complete our reports utilizing comparable methodology and data points for a fraction of the cost of a formal study.
You supply information regarding the different components of the property, such as flooring, appliances, and roofing. As a result of the data inputs, we model the cost segregation report based on our exclusive database of cost components and segregation studies.
This report is then utilized by your CPA or tax professional as a guide to prepare your tax return. It’s as simple as that.
So How Does It Work?
- You enter your property information and identify non-structural interior and exterior items.
- We use our proprietary modeling to generate your report.
- You review your report with your accountant.