Conduct of Cost Segregation Studies

Through conduct of a Cost Segregation Study (CSS), property assets are identified and reclassified to shorten the depreciation time for a more tax-favorable asset classes. The benefits of CSS are best measured in Net Present Value wherein “brick and mortar” assets are converted to “personal property” assets to improve the property’s cash flows. Examples of typical personal properties include but not limited to millwork, electrical and plumbing supplies, movable partitions, security systems, exhaust equipment, decorative lighting, emergency generators, signage, wall and floor coverings, and window treatments. Good candidates for this type of studies are newly constructed building since costs for materials and constructions were already available. Existing buildings that are recently acquired can also be good candidates if a significant amount of depreciation has not yet been taken. Likewise, assets that should have been reclassified can be recaptured in the current tax year.

  • Real estate investments best suited to undergo CSS include:
  • Realty construction valued over USD1 million
  • Building for acquisitions or improvement
  • New buildings under construction
  • Existing building undergoing renovations or expansions

Best savings potential properties include:

  • Office buildings
  • Shopping centers and complexes
  • Restaurants and food shops
  • Hotels and resorts
  • Warehouses and distribution facilities
  • Factories and industrial plants
  • Medical facilities such as hospitals and clinics