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Cost Segregation

Proper classification of construction or acquisition costs between real and personal property can achieve substantial tax savings.

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Tax savings are buried in your construction costs, and HA&W Cost Recovery Partners, LLC can help you find them.

The 1993 Tax Act extended the depreciable life of real property from 31.5 to 39 years. Taxpayers who properly classify their construction or acquisition costs between real and personal property can achieve substantial tax and cash flow savings. The result is that every $1,000,000 of personal property produces a present value tax benefit of approximately $220,000.

Our study carefully breaks down your construction or acquisition costs and allocates them to specific categories - maximizing accelerated depreciation for qualifying building components. The shorter the depreciation period, the greater your tax savings. This study could also be used to increase your sales tax exemptions, lower your property taxes and provide the basis for your property records system.

The key is our engineering approach and work paper documentation. We believe this provides more detail and support than any in the industry. Our professionals are construction engineers with knowledge of the tax code and are experienced in successfully defending our studies in front of the Internal Revenue Service (IRS) since 1981. Using tax and construction skills, we thoroughly analyze your construction or acquisition costs. We perform quantity take-offs from the construction drawings which maximize the amount of personal property costs and provide the required documentation to support our conclusions. Having your accountant or general contractor segregate percentages of construction subcontracts or invoices can leave significant and valuable tax benefits on the table and this method will not withstand an IRS audit. (IRS Legal Memorandum 199921045)

Small or large, your business can save money with a cost segregation study - typically many times the amount you invest. Contact Alan Vaughn at alan.vaughn@hawcpa.com for more information about how you can segregate what is available in every square foot of your property.

 
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