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Which properties qualify
for a Cost Segregation or Property Tax Analysis?
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Is Cost Segregation legitimate or is it some type of
illegal tax shelter?
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Why doesn't my CPA do this?
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Can any Engineer do a Cost
Segregation study and support it under Audit?
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What is the cost of a
Cost Segregation and Property Tax Consulting project?
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What are some actual IRS references showing this is legitimate
and IRS recommended?
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Will Cost
Segregation lower my annual Property Tax expenses?
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Why should I
choose GVG?
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I need another reason. Why GVG? (short answer:
experience!)
Have more questions? Call
or email us anytime !
The following properties greatly benefit from Cost Segregation studies:
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Purchased Real Property (current or prior years back to 1987)
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Newly Constructed Facilities in addition to Multiple Locations Built Since 1987
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Renovated, Expanded or Restored Existing Property
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Newly Installed Leasehold Improvements in an Existing Building
The owner must be
paying federal income tax on the property and cannot be in a net operating loss
(NOL) situation. We specialize in Cost Segregation studies for properties
with a depreciable basis greater than $10
million.
For Property
Tax Compliance and Reductions, we specialize in commercial and industrial
properties with an annual tax bill greater than $60,000 per location. We apologize we do not service non-income producing
personal residential properties.
We are asked this
question a lot. We often hear “Why haven’t
I heard about this before?”
Griffin
Valuation Group's specialists began doing these studies in the early 1980’s
when it was called the Investment Tax Credit. Cost Segregation is
not something new ! It has been used in some form since for over 40 years.
All corporations are
directed by the IRS to take advantage of accelerated depreciation on
their assets according to the IRS's own guidelines.
Please see
our
Links page for a few of the IRS publications on how property should be
depreciated using the various class lives rather than placing an entire
construction project or acquisition into a long, 39-year, tax life.
It was not until 2004 that the IRS published
its official internal Cost Segregation Audit Guide solely for its auditors due
to the increased use,
and misuse,
of cost segregation by those outside the Big-4 accounting firms. We follow the
latest version of the IRS Audit Techniques Guide which thoroughly explains the
process and legal framework we use in order to comply with IRS standards.
(Click to
Open in New Window:
IRS Cost Segregation Audit Techniques Guide)
The guidelines we have based our analyses on for the
appropriate class lives were
published back in 1987
-- Revenue Procedure 87-56 --
for use by property owners
and accountants
for
their tax
depreciation calculations. In
addition, there are hundreds of tax court cases and letter rulings that provide
a basis for these analyses.
Not a lot has
changed since the MACRS inception in the Tax Reform Act of 1986 except for some occasional case law
and rulings throughout the years. The biggest news for all of us taxpayers was
Revenue Procedure 1996-31 where the IRS began allowing everyone to
correct the depreciation on assets dating back to 1987 when they had never in
the past taken advantage of a cost segregation analysis and/or had incorrectly
depreciated assets.
We continue to use the same proven methodology that we helped develop for
Fortune 500 companies while with the Big-8 accounting firms
back in the 1980s. We
were taught by the best and we are proud to carry that great experience with us today !
IRS guidelines for Cost
Segregation studies recommend an engineered approach coupled with the real
estate accounting expertise needed regarding federal taxes and depreciable
lives.
Most CPAs are understandably either too busy or not fluent in the detailed
specifics of cost segregation and its application to tax accounting. Only the
largest of the accounting firms offer the services of the
required combination of CPAs, appraisers, and construction cost
engineers in-house like Griffin Valuation Group does.
Most tend to subcontract to a few reputable firms such as ours.
Griffin Valuation Group,
Ltd. is comprised of cost engineers, appraisers, and CPAs
-- therefore all the expertise
needed is in one place as a team to work in
conjunction with your own tax accountants.
We do not want to
take the place of an owner's CPA firm, but rather we welcome the
opportunity to work with them to ensure all of the assets are depreciated properly.
Absolutely not.
IRS guidelines
require
both
expertise in construction methods
and
expertise in tax law.
While
most
engineers are highly educated in the design of structures and equipment --
blueprint analysis,
income tax and accounting expertise,
cost estimating, and appraisal/valuation expertise are a
rare combination.
Surprising to most is that there is
virtually no true "engineering" involved in a cost segregation study, it is a matter of being experts in how properties are constructed,
how that relates to tax law,
and how to quantify and price each asset. In the case of purchase
price allocations on acquisitions - even less engineering is involved and an
expert in valuation is required to properly price and depreciate the assets
based on current fair market value in use.
Experts in
tax accounting are also required because each client can present a unique situation
that must be analyzed to ensure cost segregation can be applied or would be
useful.
Griffin
Valuation Group, Ltd. offers the superior combination of cost engineers and
valuation experts in addition to the tax accounting expertise needed
to complete a successful study.
Properly done cost segregation studies require a highly experienced
team of individuals including CPAs, appraisers and construction cost estimators.
Griffin Valuation Group satisfies this requirement to produce a high quality product based on proven methods and law.
We've done thousands of studies and can honestly say not too many
projects are exactly
alike and straight forward. Each client requires an individual detailed
assessment and a CPA like ours is required to decipher the unique aspects on the
books of each client. It takes a tax accountant to review in great detail
each client's specific situation so that a
legal, ethical and proper
analysis is always done.
Would you want to pay for a
cost segregation study then later find out from your own CPA that it cannot be used?
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The flat fee cost of each
cost
segregation, purchase price allocation, and catch-up depreciation analysis varies
based on the time involved, the number of locations analyzed, and the type of
facility.
It is unethical and against Circ. 230 to charge a contingency fee
for cost segregation analyses. We strictly follow Circular 230 guidelines,
as required by the IRS.
Please
Call
or Email us anytime to get a FREE
estimate of the tax benefit and fee to complete the analysis. See our "Contact Us" page
for our number and email address.
Our unique combination
of skills provides our clients with a Big-4 product and expertise without the big price.
We do not have any layers of management,
sales staff or administrative personnel for clients to absorb the cost of.
We are not re-sellers - the people you
talk with are the people who do the work.
We love to strap our boots on, jump in, do the work start to finish, and make our clients happy beyond their expectations !
For
Property Tax Consulting we charge no fees unless we find errors in your assessment and are successful in gaining
a lower assessment, a reduced tax bill, and any refunds, if available, for taxes
paid in prior years. For
property tax reductions we simply ask to split the savings and any refunds we
find.
Call or email us to get a free estimate of tax benefit and the fee to
complete the analysis.
There are many citations to IRS documentation on the legality and use of cost
segregation to properly depreciate assets. Below are some references
and please also see our
Links
page for some interesting articles and links to the IRS website.
Click on the links below to read more:
(each opens in new window)
Quotes from the IRS's Cost Segregation Guide:
"In order to compute depreciation using proper class lives and recovery periods,
assets must be assigned to the proper asset classes. Cost segregation studies generally
produce listings or groups of assets, based on asset classes under ACRS (Accelerated Cost
Recovery System) or MACRS (Modified Accelerated Cost Recovery System). "
(Click to open IRS Source)
"In order to calculate depreciation for Federal income tax purposes, taxpayers must
use the correct method and proper recovery period for each asset or property owned.
Property, whether acquired or constructed, often consists of numerous asset types with
different recovery periods. Thus, property must be separated into individual components or
asset groups having the same recovery periods and placed-in-service dates in order to properly compute depreciation."
(Click to Open IRS Source)
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Not necessarily and be very wary of those who
say it does. The rules of real vs. personal
property and taxable vs. exempt vary from state to state.
While performing a Cost
Segregation analysis we check the local property tax assessments and ensure the
property is placed on the assessors' tax rolls properly and fairly. If
not, we can appeal the assessments to ensure the property is taxed fairly and
accurately.
Griffin Valuation Group has experts in property
taxation, valuation, appeals and tax compliance in all 50 states.
Most
often individual states do not follow the same rules as federal income tax on what is real estate
vs. personal property;
therefore,
a cost segregation analysis
should never be provided to an assessor for use on local property tax assessment
purposes. It is simply not apples and apples.
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