Frequently Asked Questions

Cost Segregation is the detailed separation of building components and assets by allowable useful life for Federal Income Tax purposes in order to capture the dividend and/or cash flow benefits with shorter depreciable lives. While the capturing of only the carpet and cabinets as personal property may yield 3% of the component costs, a non-intrusive yet detailed engineering study can mean three-, five sometimes 20 times more savings than the 3% found in cabinets and carpeting. These savings can be substantial and the cost of the report can be paid for in the first year of savings!

Because of the "present value effect" -- AKA a "dollar today is worth more than a dollar tomorrow" -- an IRS-compliant tax deduction today is worth far more than one claimed in the future. Assume that the deduction is for depreciation and that the "today" is actually a 5 or 7 year recovery period while the "tomorrow" is a 39 year recovery. The accelerated depreciation from the shorter period means increased current cash flow, which in turn can be used to underwrite current or future expansion. The real dollar savings go to your bottom line! And the CostSegPLus (tm) unconditional guarantee makes this an irresistible proposition.

For purchased property, one key is the cost/value allocated to land versus land improvements, building, and personal property. The most defensible position for the taxpayer is a complete property appraisal. Another approach is to determine the market value of the land only. The balance of purchase price can be assigned to the improvements. The least costly alternative, and the one most likely to be scrutinized by the IRS, is to base the allocation on the assessor’s split between land and real property improvements.

How Does Cost Segregation Affect A Contractor
or Management Company?

These types of companies can offer Cost Segregation as a value added service. Gerber & Co. can counsel you on specific procedures to observe during construction that can document allocations and save significant time and money.

What potential tax savings may be lost by neglecting to take advantage of accelerated depreciation?

Accelerated depreciation adheres to well found interpretations of the Internal Revenue Code sections, applicable court cases and revenue rulings. Under IRS Revenue Procedure 96-31, real estate owners can change their method of accounting in order to re-compute the allowable depreciation and claim a retroactive adjustment for previously filed tax returns for both open and closed tax years. This creates an opportunity to correctly classify fixed assets and claim the entire difference between the allowable depreciation and the depreciation actually taken on past tax returns. Through four equal annual adjustments, real estate owners can correct what may have been years of incorrect property depreciation write offs and realize large tax savings.

The initial feasibility report is a free, simple one-page form. Upon completion by the owner, fax or email to us. An initial free evaluation will be made available to the owner showing costs and a likely range of savings using the Cost Segregation Program. We will also provide a copy of our written unconditional guarantee.

If an agreement is made to go forward, the cost segregation agreement will allow our engineers to perform an engineering study identifying and classifying building components other than carpeting and cabinets. Component analyses will include walls flooring, and ceilings, plumbing, electrical, heating and air-conditioning, sound system and lighting.

Sure! Call 310-289.9888 and speak with Selwyn Gerber CPA or Suzanne Payne CPA who will take you through the intial steps and give you a preliminary indication of whether your property is likely to qualify for the substantial tax cuts we generally deliver.

"We can slash your tax bill with an IRS-compliant CostSegPlus (tm) analysis - where we use proven advanced cost segregation strategies to deliver bottom-line tax savings" - Selwyn Gerber CPA

" A Cost Segregation Analysis will deliver tax savings for any owner of almost any industrial, commercial or residential property" - Suzanne Payne CPA