Get the Answers to Your Cost Segregation Questions
What is a CSSI Study?
A CSSI Study is an engineering-based 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.
Why haven’t I heard of cost segregation?
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.
Does my property qualify?
Yes, if you:
1.) Purchased, constructed, or remodeled property after December 31, 1986.
2.) Anticipate holding the property for at least a few years.
Can I benefit from a CSSI Study?
Yes. Let us provide the necessary data to your advisors to determine potential tax benefits.
When should a study be done?
It is best to have a study completed for the year the building or improvements are placed in service. However, the U.S. tax code 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, recent U.S. tax code allows 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 December 31, 1986.
What information will be needed to complete a CSSI Study?
While each study differs, we generally request the following information, if available:
1.) A current tax depreciation schedule
2.) Building cost information
3.) Change orders
We can assist you in gathering the necessary data.
How does a CSSI Study work?
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 engineering-based cost segregation analysis is performed by professional personnel with in-depth knowledge of construction methods, materials, and building components and can perform a detailed analysis to properly identify the building components and improvements that will be reclassified to take advantage of accelerated depreciation.
Why should I perform a CSSI Study?
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.
How long does a CSSI Study take?
A CSSI Study normally takes about 4 to 6 weeks from the time we receive all the appropriate documentation.
What will happen in the event of an audit?
If you are under audit for any reason and the CSSI Study comes into question, an engineering-based cost segregation study professional from CSSI will attend the audit without any charge.
Can a CSSI Study apply to buildings not yet constructed?
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.
Why should I choose CSSI?
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 personnel 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.