cost segregation presentation
DESCRIPTION
A brief summary of how a cost segregation study can benefit a property and or business owner.TRANSCRIPT
![Page 1: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/1.jpg)
Cost Segregation – Maximizing Tax Savings
Gil Mitchell – Director WTAS LLC
100 First Street, Suite 1600, San Francisco, CA [email protected]
(Tel) 415.764.2750, (Fax) 415.764.2770www.wtas.com
![Page 2: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/2.jpg)
West Region Leader
Gil Mitchell, ASA – San Francisco– Has 25 years experience in :
• Cost Segregation, Property Tax Consulting, Machinery Appraisal and Real Estate Appraisal
– ASA in Machinery and Equipment Appraisal
– Certified General Real Estate Appraiser AG005951
– Formerly with:• Arthur Andersen, Grant Thornton, Moss Adams and Oregon
Department of Revenue
Gil’s Contact information:
• (Tel) 415.764.2750, (Fax) 415.764.2770
![Page 3: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/3.jpg)
Jack Young, GPPA, CPA
– Experience in:• Financial Analysis
• Income Tax Consulting
• Machinery and Real Estate Appraisal
– USPAP appraiser of Machinery and Equipment
– Certified Public Accountant
– Formerly with:• KPMG
• Price Kong, CPAs
• Bar None Auction
• West Auction
Jack Young contact information(530) 219-7900 [email protected] www.norcalvaluation.com
![Page 4: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/4.jpg)
Tax Deferral Strategy Analysis of project costs for constructed or purchased buildings & improvements Segregation of costs into “Personal Property” and “Real Property”A Means of Accelerating Depreciation Expense for Building Owner
•"A nickel isn't worth a dime today."
What Is Cost Segregation?
![Page 5: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/5.jpg)
How Does Cost Segregation Work?
• Cost Segregation analyzes project costs to identify personal property (an Investment Tax Credit Standard) within and without of the structure.
![Page 6: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/6.jpg)
The IRS has established asset classes "1250 & 1245" and depreciable lives for constructed properties– 27.5 years – Residential 1250
– 39 years – Commercial/Industrial 1250
Classes with shorter lives
– 15 years – Site Improvements 1250
– 7 years – Trade Fixtures 1245
– 5 years – Trade Fixtures 1245
Depreciation Lives Under Current Tax Law (MACRS)
![Page 7: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/7.jpg)
New ConstructionPurchased FacilitiesRemodelsRenovationsExpansionsLeasehold ImprovementsEstates (Change in Basis)
What Kinds of Projects Benefit?
![Page 8: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/8.jpg)
Can A Study Be Performed Retroactively?
• Yes!
Depreciation is considered a method of accounting. A study that “looks back” to prior tax years and results in a depreciation adjustment is an IRC 481(a) adjustment and is deducted over one year. Prior returns are not amended. We can go back to 1987.
![Page 9: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/9.jpg)
Target industries: ANY INCOME PRODUCING PROPERTY: facilities such as manufacturing, industrial, research labs, financial institutions, office buildings, hotels, retail stores and shopping centers
0%
10%
20%
30%
40%
50%
60%
70%
80%
Apartments
Assited Living
Auto Dealers
Banks
Golf Course
Grocery Stores
Health Club
Hotels
Manufacturing
Offices
Restaurants
Retail
Warehouse
Wineries
Cost Segregation ServicesTypical Reclassification Percentage by Industry
![Page 10: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/10.jpg)
Increased Cash Flow No Obligation Proposals We Estimate the Benefits in Advance A “Complete Depreciation Solution” for
Clients Buying/Developing Real Estate Documentation Minimize property taxes Proceeds can be used for debt repayment,
reinvestment, capital repairs, or other acquisitions
Benefits to Client
![Page 11: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/11.jpg)
Manufacturing Facility - Tenant Improvement Analysis
Project cost = 1,671,450
Date place in service = 2002
Amount moved out of 39 year life to 5, 7 & 15 year lives = $1,379,000
1st year benefit with 30% bonus depreciation = $215,000
![Page 12: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/12.jpg)
Office Building - Retroactive study
Purchase price = $2,794,000Date place in service = 1996Amount moved out of 39 year life to 5, 7 & 15 year lives = $445,0001st year increased depreciation = $266,2001st year benefit with change of accounting = $93,170
![Page 13: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/13.jpg)
Summary
A Value-Added Service to Our Clients
Easy to Explain - Compelling Benefits
Documented Support for Our Client
Written Marketing Materials
No Obligation Proposals
![Page 14: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/14.jpg)
Next Step: No Obligation Proposal
What we need:• Depreciation schedule for purchased property
• Contractors cost breakdown for new construction
Your proposal will include:Documents suitable to take to your tax advisor.
• Estimated cost allocation of short lived items.
• Estimated tax savings
• Appraisal fee proposal
![Page 15: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/15.jpg)
Brainstorming:
What specific clients or properties would benefit from a
Cost Segregation Study:
• Office buildings
• Wineries
• Apartments
• Shopping centers
• Retail
• Restaurants
• Grocery Stores
• Manufacturing
![Page 16: Cost Segregation Presentation](https://reader035.vdocuments.us/reader035/viewer/2022062319/5586375cd8b42a4a348b4666/html5/thumbnails/16.jpg)
Questions?