Services

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The primary purpose of a cost segregation study is to identify all property related costs that can be depreciated over 5, 7 and 15 years.  We perform a comprehensive analysis of construction documents utilizing an engineering methodology in accordance with IRS standards.  The savings can be significant. For each $100,000 in assets that can be reclassified from a 39- year recovery period to a 5-year recovery period, a $16,000 net-present-value savings may result, (assuming a 5-percent discount rate and a 35-percent marginal tax rate).  

Robert James Valuation Consultants, LLC goes beyond a traditional analysis and includes a separation of the building structural components so when they are replaced, a loss deduction can be claimed. 

When a building is purchased, the lump sum purchase price includes non-depreciable land, buildings, land improvements, and personal property. Even if the purchase contract includes a value for the easily identified personal property such as tables, chairs, equipment, etc..., a large amount of non-structural personal property may be identified in the residual building account. The suggested procedure is to perform a highly detailed cost approach which will identify all assets buried in the building account. This type of analysis requires a consultant who is well versed in construction cost estimating and valuation. Our detailed analysis not only captures accurate allocations but because of our extensive component categories may also be used to assist the property manager with future day to day management issues. 

If you constructed or purchased real estate in a prior year but did not take advantage of a cost segregation study, the IRS allows you to “catch up” without amending a return, and take the entire adjustment in the year the cost segregation study is completed. 

Complex projects such as mixed use properties often contain various real estate entities under the same roof. High rise structures for example, may include office space, residential condos, retail space, and even a hotel. Very often parts of such a project are sold off and the need for a proper allocation of the construction costs is essential. Further, this type of project undoubtedly will have different placed in service dates. The proper breakout of the construction costs including allocated soft costs and other fees needs to be carefully scrutinized.  

Tenants often make extensive improvements to buildings. Often these improvements must be removed at the end of the lease. Do you have any idea how much this would cost? The professionals at Robert James have extensive experience in estimating renovation costs and can assist with your projections. 

Highly detailed cost segregation studies have been used for insurance purposes, abandonment studies, potential property tax relief, and numerous credits and incentives. Please contact us with your concerns.