Factors To Consider When Deciding On A Cost Segregation Partner

Posted by Sarah Jones on March 17th, 2021

Right from the word go, cost segregation is a tax-reducing strategy. All that your CPA needs to do is join hands with experts specializing in cost segregation services. Let’s understand how to choose cost segregation experts and what the benefits from such a move entails.

A quality cost segregation study is about the information that includes

1. Checking of available records

2. Inspections and Interviews

3. Finding and freeing up resources for reinvestment purposes

4. Differentiating between assets, and

5. Grouping of assets to optimize tax savings,

6. How to reduce short-term tax liabilities.

To get accurate results in each process, one needs to consult the experts. Here’s a brief outline on how to choose a cost segregation partner that CPAs should consider

1. Are The Certification And Affiliations In Place?

Make it a point to check the details on the resume and biographies of one who will be conducting the study. The first thing to ensure is whether the company you connect with is certified by the American Society of Cost Segregation Professionals (ASCSP). The designation will mention Certified Cost Segregation professional as CCSP, after the name.

Any credential less than this should not suffice. For instance, one hires a CPA to file tax returns; then, a CPA needs to connect with a CCSP to conduct a cost segregation study.

2. Will The Cost Segregation Experts Be There During Audit Checks?

You will get a cost segregation report from any firm. But the assurance that you need is whether it can help you face IRS checks. The choice of specialized professionals lies in how they guide you during IRS audits.

For the kind of reliability that you want, check on the experience. When the experts you choose have the years of experience behind them, you know you will be able to sail through the IRS audits smoothly.

3. Do They Have High-Profile Clients?

One can go through the work profile. It is easy to gather information on the clients that the experts have attended previously. Work with a company that has some high-profile clients in its base. When you don’t find one or two high-profile clients, the firm does not have the relevant experience dealing with IRS.

Some may claim to work with multinationals, but maybe working for franchisees, so check on this aspect.

4. Does The Firm Have Tax Experts To Handle Queries?

The tax structure can have many ups and downs with cost segregation deductions in the tax returns. Cost segregation engineers may not know about such intricacies about the deductions. Partnering with experts can help save money if a CPA has queries related to a situation.

Or else, a CPA may have to fish through lots of research and find the right answers. Joining hands with experts serves as a time and money-saving device.

5. What Approach Will The Experts Take?

Find out about the various approaches and which one your chosen experts will use. Some of the approaches in a cost segregation study include some of the following – detailed cost estimation approach, sampling approach, survey approach, etc. to face tough audit checks.

6. What Is Their Track Record?

One should always ask for reference and recommendations from other CPAs. One should ask for references for Cost Segregation Experts. And when you connect with the right firm, check on successful work done in the past, successful audits, sample reports, and case studies, etc.

Why Is Cost Segregation Important?

A cost segregation study is crucial soon after the purchase, construction, remodel, of a property thereafter or within the first year of purchase to get maximum benefits.

Whether you are going in for new construction or new purchase, the beneficial time to maximize depreciation deductions is from the same year you purchase or start construction or remodel.

Benefits of cost segregation study

1. A reduction in tax liabilities

2. Acceleration in depreciation

3. Avoidance of paying fines and penalties

Who Should Consider Cost Segregation?

As mentioned earlier, cost segregation helps to reduce tax liabilities for those who deal substantially in property-related matter and are owners or land lord of rental properties.

Cost segregation experts study and evaluate assets and assess everything to prepare a detailed reporton newly purchased buildings, improvements to buildings, equipment, and land. The study also take into account electrical or plumbing costs that accrue in operating machinery and other tools.

Cost segregation services are mostly for commercial real estate investors or rental property owners/landlords who are actively involved in property transactions. They can benefit from a sizeable reduction in tax liabilities.

Over to You

Are you looking for expert services? Connect with Lindon Engineering Services for benefits of expert analysis and accurate reports with affordable charges and prompt services.