We really enjoyed working with Veritax Advisors; they provided us with significant value. We particularly appreciated that they inspected our property to get first-hand evidence of equipment and infrastructure.
Overview & Qualifications
A cost segregation study is a tax planning tool that’s based on a detailed process that identifies all the costs associated with a building’s purchase, construction, or renovation. Each cost identified is assigned its shortest possible recovery period per IRS guidelines.
This allows owners to increase depreciation deductions, reduce their income tax liabilities, and maximize cash flow from their real estate investment. Veritax’s cost segregation studies are an affordable investment for real estate investors and yield significant returns.
Our cost segregation advisors will determine if your property is a good fit for the study by first preparing an initial detailed no-cost analysis in which we analyze the benefits of performing a study. During this time, we’ll also ensure you meet the minimum qualifications for a study, which are as follows:
- You have taxable income
- You have purchased, constructed, or renovated (including tenant improvements) a commercial real estate property in the last 20 years
- Your purchase or construction costs are $250,000 or greater
Data Collection
Once our team of cost segregation tax and financial advisors have determined that there are significant benefits to performing a study and that you qualify, we’ll begin requesting all appropriate documentation, such as:
- Appraisals
- Building plans
- Construction drawings
- Purchase agreements
Site Visit
Once we’ve completed the data collection phase, we’ll visit your property to determine the accuracy of the building plans and identify the building components that qualify for a shorter recovery period. This is documented through measurements, pictures, and field notes.
Analysis
All information we’ve gathered up to this point is entered into specialized engineering software. That software integrates the plans of the building and calculates the measurements and counts of all building components. Finally, we download the data into our powerful proprietary software that assigns pricing and recovery periods to each component.
All studies include a thorough review and documentation of the tax law that allows taxpayers to assign a building component to a shorter recovery period.
If the study is being done on a property constructed or purchased in a prior year, we will provide the appropriate information to file IRS Form 3115 (Change of Accounting Method).
