A CSSI Study is an engineering analysis that reclassifies or segregates real estate components and improvements between real and personal property in order to accelerate the depreciation periods from 39 or 27.5 years to 15, 7, or 5 years.
Cost segregation was first applied and performed by major accounting firms with in-house cost segregation departments on the largest properties of their most significant clients. One study originally cost upwards of $100,000.
CSSI developed the methods and protocols to deliver this same service to commercial property owners at very affordable rates. This means you can take advantage of this tax savings that was once only enjoyed by the owners of exceptionally large properties.
Yes, if you:
1.) Purchased, constructed, or remodeled property after Jan. 1, 1986
2.) Anticipate holding the property for at least a few years
Yes. Let us provide the necessary data to your advisors to determine potential tax benefits.
It is best to have a study completed for the year the building or improvements are placed in service. However, IRS Revenue Procedures allow taxpayers to “catch up” on the depreciation that was not claimed from the first day the property was placed in service without amending prior years’ tax returns. Furthermore, the IRS recently allowed for the “catch up” period all in the first year rather than over four years, when the Revenue Procedure 99-49 was first introduced. A cost segregation study can be performed on any property constructed, acquired or remodeled since Jan. 1, 1986.
While each study differs, we generally request the following information, if available:
- A current tax schedule
- Building cost information
- Change orders
We can assist you in gathering the necessary data.
Building costs are generally classified for federal income tax purposes into three categories; (1) Tangible Personal Property, (2) Land Improvements, and (3) Real Property. Each has a different recovery period and method under the Modified Accelerated Cost Recovery System (MACRS). Our qualified engineering-based analysis is performed by professional personnel with in-depth knowledge of construction methods, materials, and building components can perform a detailed analysis to properly identify the building components and improvements that will be reclassified to take advantage of accelerated depreciation.
Without a CSSI Study your accountant will only be able to use straight line depreciation, 39 or 27.5 years. A CSSI Study provides your accountant with accurate information to establish 5, 7, 15, and 27.5 or 39-year depreciation schedules, which substantially increases tax savings in the earlier years of owning your property.
A CSSI Study normally takes about 4 to 6 weeks from the time we receive all the appropriate documentation.
No. A CSSI Study strictly adheres to the IRS Cost Segregation Audit Technique Guidelines.
If the CSSI Study comes into question, a engineering-based cost segregation study professional from CSSI will attend the audit without any charge.
No. However, for projects not yet constructed, CSSI can provide estimates on tax savings from your construction budgets. A CSSI Study will be delivered when construction is complete.
CSSI’s engineering-based cost segregation study professional personnel have the expertise in tax laws, cases, and ruling on cost segregation, along with real estate development and construction experience to maximize your tax savings. Only exceptionally large accounting firms have in-house engineers who can perform a cost segregation study at substantial fees. Our company will work with your advisors to help you take advantage of this extremely viable tax savings solution.