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Federal Tax Reduction
Dallas Cost Segregation Reduces and Defers Income Taxes
Click here for a complete list of Tax Reduction Services
Is This Component Depreciation
Cost segregation generates similar results to a process termed component depreciation, which was utilized until the mid 1980s. Tax reduction and tax deferral are the primary benefits of cost segregation. Cost segregation is an IRS-guided process to accurately allocate the cost basis of real estate for depreciation purposes. Depreciation often increases by 50% to 100% as a result of obtaining a cost segregation study. Cost segregation both reduces and defers federal income taxes.
Cost segregation reduces federal income taxes since it converts income which would have been taxed at the ordinary income rate to income taxed at the capital gains rate. For many taxpayers, this reduces the amount of federal income taxes by more than 50%. Cost segregation defers income taxes from the time income is earned until the real estate is sold, or a gain on the real estate is recognized (when a 1031 tax-deferred exchange is utilized).
Eperience
Cost segregation studies conducted by the nationwide leader O'Connor & Associates exceed the IRS standards for a quality study to reduce federal income taxes and pass IRS audits. Our team of cost segregation experts has over 60 years of experience in this specialized area. We can conduct a valuation or cost segregation study or provide a preliminary estimate within 24 hours, allowing you to file an amended return later in the year. Our estimates of potential savings are often deciding factors for clients who delay their filings. You can obtain a complimentary preliminary analysis to determine your first year income tax reduction. Estimated tax savings are based upon your federal and state income tax rates. In addition, clients experience the positive impact of "catch up" depreciation. ("Catch-up" depreciation is depreciation under reported in prior years.)
More Depreciation
Cost segregation can reduce federal income taxes for owners of commercial or multi-family real estate by correctly calculating real estate depreciation. Increasing depreciation improves the tax benefits of commercial and multi-family properties by effecting tax reduction and deferring the payment of federal income taxes. Following is a summary of typical year-one income tax savings for a variety of land uses. The tax savings do not include "catch up" depreciation.
Property
Type |
Range on Year 1 Tax Savings
(100,000-500,000 sq. ft. property size)
|
Office
Apartment
Retail
Industrial |
$35,500 - $160,000
$19,240 - $96,200
$36,500 - $182,600
$10,800 - $54,000 |
Typical first year tax savings are 4:1 to 50:1 times the cost of the study.
Free federal income tax savings calculator (from correctly calculating depreciation). Request a complimentary analysis of savings.
Why Haven't I Heard About This?
Cost segregation is recognized by accounting and tax preparation professionals as a legitimate and effective strategy to reduce federal and state income taxes. However, in many cases tax preparers do not recommend cost segregation because they either do not have a working relationship with a cost segregation provider or they have not had an opportunity to review the impact of cost segregation on the client's income taxes.
IRS Guided.
Cost segregation is a conservative, IRS-defined approach implemented by our professional real estate appraisers to update depreciation schedules for commercial properties and correct component allocation, ultimately reducing your federal incomes taxes. Most owners of commercial real estate are inadvertently overpaying federal income taxes by simply separating land from improvements on their depreciation schedule. Utilizing appraisers allows O'Connor & Associates to offer considerable cost efficiencies to this process. Our fees are typically one-half those charged by non-appraisal firms for comparable commercial properties.
Clients have saved over $100 million as a result of cost segregation studies prepared by our appraisers. We use IRS guided process for gathering data, calculating the market value of components which can be segregated and compiling results into a report. After performing thousands of reports, our results have not been revised in the handful of related audits.
Effective.
Cost segregation is the most accurate way to depreciate improved commercial property acquired or built after 1986 and one of the more effective methods to reduce federal income taxes. When using this approach for federal tax reporting, the depreciation of certain commercial property improvements and components may be reflected in shorter-life recovery periods. Depreciation is the primary non-cash tax deduction. Net income is significantly affected by reducing federal taxes when selected improvements are depreciated over 5, 7 or 15 years, rather than 39 years for commercial property and 27.5 years for apartments. Reducing the depreciation life for components increases annual depreciation, and effects reduction in federal income taxes.
Catch-Up Depreciation.
Cost segregation allows you to "catch-up" previously under-reported depreciation without filing any amended tax returns. All "catch-up" depreciation can be utilized in the tax return filed after obtaining a cost segregation study, without filing any amended tax returns. We can provide you and your tax preparer guidance in the mechanics of reporting catch-up depreciation.
Affordable.
O'Connor & Associates pioneered the use of real estate appraisal specialists to value eligible commercial property components according to the IRS Cost Segregation Audit Techniques Guide. Using standard accepted methodologies, our appraisers' analytical and time efficiencies translate to cost effective fees for the resulting report. Our firm is committed to cost effective, legitimate tax reduction. Clients save over $100,000,000 annually as a direct result of our services.
Our modest fees magnify the year-one payback ratio and make cost segregation cost effective for more owners. Year-one income tax savings are almost always at least two to four times our fee. In come cases (for owners who have owned property for over 10 years), year-one savings were more than 100 times our fee.
Our low price point opened the door to a higher level of tax deductions for commercial properties with as little as $500,000 in building improvements.
Accountant Friendly.
Most importantly, our advisors and appraisers interact with the client's accountant or tax advisor throughout the process. By partnering with the accounting profession, we apply cost segregation to a breadth of applications for tax savings on commercial property, even when REITs, partnerships, corporations or 1031 Exchanges are involved.
Coordinating with the client's tax preparer typically occurs early in the consultation, and almost always prior to engagement. The tax preparers insights are an integral component in the advisory service. Owners of older commercial properties can report prior years non-depreciated components and realize a significant reduction in taxes, without filing an amended return.
OConnor & Associates has 34 state-licensed appraisers who have inspected sites and calculated costs for thousands of commercial properties across the nation. We can prepare a thorough report to document the total amount of depreciation you are entitled to report to the IRS (5, 7, 15, 27.5, 39-year commercial property) as well as the land value. Your CPA will welcome the backup documentation!
Utilizing a cost segregation study saves federal income taxes immediately and in the future. Let OConnor & Associates conduct a cost segregation study on your commercial property for a nominal flat fee. Typical first year tax savings are 4:1 to 50:1. You can achieve substantial results with minimal risk.
Tax Reduction Services
Cost segregation studies are beneficial in all geographic markets and in a wide range of property and business types.
Nationwide in dozens of cities including:
- Dallas / Ft. Worth, TX
- Atlanta, GA
- Baltimore, MD
- Boston, MA
- Bridgeport, CT
- Denver, CO
- Hartford, CT
- Houston, TX
- Las Vegas, NV
- Los Angeles, CA
- Memphis, TN
- Miami, FL
- New Orleans, LA
- New York, NY
- Orlando, FL
- Philadelphia, PA
- Phoenix, AZ
- San Francisco, CA
- Tampa, FL
- Washington, DC
Property/Building types including:
- Apartments/Multifamily
- Free Standing Retail Stores
- Hospitals
- Hotel/Motel
- Industrial
- Manufacturing
- Medical
- Office
- Recreational/Entertainment
- Restaurants
- Self-Storage
- Shopping Malls
- Shopping Plazas
- Warehouse/Distribution
Request a FREE analysis of potential income tax savings!
Or, call Larry Brewster at 1-800-856-REAL(7325)
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