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Cost Segregation Study

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A Cost Segregation Study (CSS) is an engineering based report of the costs pertaining to a real estate improvement. The purpose of a CSS is to take advantage of accelerated depreciation tax deductions which provide immediate cash savings through a lower tax liability. This detailed report will allow the property owner to allocate an average of 20-40% of the property’s improvement value to asset classes with accelerated depreciation.

Generally, commercial buildings must be depreciated over 39 years and residential buildings over 27.5 years. With a CSS, owners have the ability to reclass a portion of asset costs to the following year classes: 5 years, 15 years, 17 years or 20 years, allowing an owner to reap depreciation benefits much quicker than the standard timeframe. 

How It’s Performed:

Our construction and tax specialists evaluate a property to determine how much of the overall asset qualifies as real property (27.5 or 39 years) or personal property (5-20 years). Detailed records such as construction drawings or appraisals are reviewed, and site visits and interviews will be conducted. Our professional staff includes a licensed CPA, Registered Architect and various real estate and construction team professionals adept at cost engineering.

Qualifying Properties:

  • New Construction
  • Renovation Projects
  • Leasehold / Tenant Improvements

What We Provide:

  • Classification or reclassification of approprimate building components into the fitting tax life as allowed by IRS guidelines.
  • Allocation of indirect costs to each asset.
  • A written report with asset details supporting reclassifications.

Why Use J&S:

J&S Professional Services’ Team is comprised of CPA, Architecture and construction trade professionals that can collectively conduct a thorough and authoritative review of a building owner’s asset to determine how each building’s components should be reclassified in accordance with the IRS’ 13 principal elements to provide maximum tax benefits.

Email for questions or inquiries, or call 931-528-7475. 

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