Frequently Asked Questions

/Frequently Asked Questions
Frequently Asked Questions2018-06-22T18:53:43+00:00
Can NCSS do a Cost Segregation Study in my State?2017-04-20T16:26:25+00:00

Yes.

We provide cost segregation services throughout the United States of America on nearly every type of commercial property including residential rentals and agricultural properties. If you own commercial property in the USA and you are subject to US Federal and State Taxes, you probably qualify for a cost segregation study.

We provide free projections so you can determine how beneficial a cost seg study would be in your particular tax situation.

What is Cost Segregation?2017-04-13T22:00:39+00:00

Cost Segregation (also called accelerated depreciation) is an IRS approved tax saving strategy available to commercial property owners and real estate professionals. Cost Seg is the most accurate and correct method to depreciate commercial property assets.

By having a study completed on your property, significant portions of building costs (qualified property) can now be depreciated in as little as 5, 7, and 15 years, instead of waiting 27.5 years for residential rental property or 39 years for commercial property. By capitalizing on the time value of money, property owners are now able to significantly increase their tax savings and cash flow benefits.

We offer free projections so you can discover how beneficial a study may be for you. Get started with a free projection today!

Who Qualifies for a Cost Segregation Study?2017-04-20T16:34:21+00:00

Any property owner or real estate professional who has purchased, constructed, renovated, remodeled, restored, or expanded a commercial building since 1986. There are also benefits for those who paid for facility leasehold improvements over $100,000. Property owners who are planning for a future 1031 exchange, would also qualify for cost segregation.

Generally, properties with a minimum basis (cost) of $250,000 will benefit from cost segregation.

We offer a free analysis for any property owner interested in seeing the tax saving benefits of cost segregation.

What are the Major Benefits from a Cost Segregation Study?2017-04-20T16:28:39+00:00

Individual benefits will vary from one tax situation to the next, but these are the general benefits most of our clients experience:

  • Increased Cash Flow
  • Large Income Tax Deferrals
  • Independent Verification of Depreciation Schedules
  • Ongoing IRS Audit Protection and Support from NCSS
  • Catch-Up Depreciation
  • Bonus Depreciation
  • Suite-by-Suite Breakdowns of Building Costs
  • Capitalized time value of money
  • Cost Segregation is the correct and most accurate method of depreciating commercial real estate.

We provide free projections so you can determine how beneficial a cost seg study would be in your particular tax situation.

Can My CPA do a Cost Segregation Study for Me?2017-04-20T16:25:30+00:00

Short Answer: Probably not.

It is important to understand that a well done cost segregation study is a combination of tax law and engineering principles. A knowledgeable CPA can perform a cost segregation study, but without expertise in construction and engineering, CPAs are left performing an invoice-based cost segregation effort. This method is usually limited to reviewing mountains of paperwork, including invoiced purchases and contractor invoice line items. There is little assurance that even a majority of qualifying assets will be identified – let alone reclassified, thus leaving huge amounts of money on the table at a loss to the property holders.

Cost segregation is our core competency. Think of it this way, if your accounting firm were a General Family Doctor, we would be Brain Surgeons. This is our main focus and we do it very well.

National Cost Segregation Services’ engineer-based studies apply the most accurate construction costing methods available in the industry. We utilize blue prints, plans and site inspections. Engineered studies are more comprehensive and offer greater audit protection by exceeding the rigorous documentation standards required by the IRS.

We work with several CPA’s and accounting firms throughout the country who refer us directly to their clients to provide cost segregation services. Our final product is a turn key solution for the accounting firm for easy application. We work closely with the CPA/tax preparer to benefit the client who owns the property. We do not replace the services your CPA provides.

We provide free projections so you can determine how beneficial a cost seg study would be in your particular tax situation.

Will a Cost Segregation Study Trigger an IRS Audit?2017-04-13T22:07:06+00:00

No.

Cost segregation is the correct method of depreciating commercial real estate. If a study is done at the very beginning of a property being placed in service, the proper method of depreciation is now already in place and will continue forward until the building is fully depreciated or the owner sells the property.

For properties that have not had a cost segregation study completed and have been utilizing traditional straight-line depreciation in years past, we prepare a necessary form for them to file with the IRS after the study is completed. This is called a Form 3115 which is an “Automatic Change in Accounting”. This filing is already pre-approved by the IRS. Because we adhere to all IRS publications, you can be confident in the increased protection our studies will provide. We include a form 3115 (when applicable) with all of our studies to ensure it is done correctly.

We have successfully completed thousands of studies, and not one of our studies have triggered an IRS audit. We have clients that have had their business audited and therefore have had their cost segregation studies pulled into the audit and scrutinized, but all of our studies have come back as “no change”. Our clients have never had to give a single dime back.

NCSS provides ongoing support of any IRS inquiry at no additional charge to you.

We provide free projections so you can determine how beneficial a cost seg study would be in your particular tax situation.

How Much Does a Cost Segregation Study Cost?2017-04-20T16:32:10+00:00

Short Answer: Generally $6,000 – $12,000 for an engineer based study. We do offer additional savings on multi-building projects.

Our fee structure is based off the amount of time we project it will take us to complete the study. We have one time fees that are fixed and not a % of savings from the study. Generally, our clients experience a 5:1 to 50:1 return on their investment in just the first year alone! Keep in mind, that our fee is also tax deductible!

Our FREE projections are customized to your specific situation and property. There are many variables that come into play depending on the type of property being looked at. That is why we will show you all of the benefits and fees associated with your cost segregation study before you decide to move forward. This is very beneficial for property owners because NCSS takes the upfront risk and vested time to provide you with relevant information needed to make an educated decision on if a study would be right for you.

Won’t We Get the Deductions in the Future Anyway?2017-04-13T22:14:11+00:00

Yes you will.

Consider, however, the benefit of having your money now and being able to invest it in additional properties, building improvements, paying down debt, etc. The value of your dollar will continue to go down, so front-loading your depreciation deductions into the early years of ownership allows you to capitalize on the time value of money.

Think of it this way. If we gave you a check for 5 million dollars and gave you the choice of cashing it now, or cashing it 39 years from now, what would you choose? Most people would choose to have their money now. Contrast this to letting the government have your money now and investing it however they want. You WIN here every time! You’re are basically giving Uncle Sam an interest free loan of your hard earned dollar by not utilizing cost segregation…so would you rather pay yourself or the IRS?

A cost segregation study is also beneficial should the commercial property owner pass away or if the building is going to be sold in the future.

We provide free projections so you can determine how beneficial a cost seg study would be in your particular tax situation.