Nexus Planning Group, LLC

Cost segregation studies are one of the most valuable tax strategies for owners of commercial real estate. You stand to benefit from a cost seg study if:

• You have purchased or constructed commercial property since 1986
• You have renovated, expanded or restored an existing property
• You have installed leasehold improvements in an existing property
• You are a current income tax payer

Cost segregation was first applied and performed by major accounting firms with in-house cost segregation departments on the largest properties of their most significant clients. A single study originally cost $100,000.

The firm we represent is the nation's premiere company that has developed the methods and protocols to deliver this same service to commercial property owners at very affordable rates. This means that you can take advantage of this tax savings that was once only enjoyed by the owners of exceptionally large properties. This is a cost segregation engineering firm specifically focused on performing engineering-based cost segregation studies for commercial  properties valued at $300,000 or more. Studies can also be performed on single family residential investment properties and multiple property studies can be bundled together for greater cost savings.

It is best to have a study completed for the year the building or improvements are placed in service. However, IRS procedures allow taxpayers to "catch up" on the depreciation that was not claimed from the first day the property was placed in service withot amending the prior years tax returns. Furthermore, the IRS recently allowed for the "catch up" period all in the first year rather than over four years, when Revenue Procedure 99-49 was introduced. A cost segregation study can be performed on any property constructed, acquired or remodeled since Jan 1, 1986.

Clients can uncover significant positive Net Present Value (NPV) through a cost segregation study, allowing the for the recovery of money that has been left on the table and for increasing cash flow. NPV is a calculation used to determine the return on investment of a purchase, project or study over its lifetime. NPV calculations are used during an analysis of the net cash flow benefits of a cost segregation study.

In fact, while tax savings vary based on calculations involving your overall tax situation and the specific assets in any given property, the positive benefits of a cost segregation study may be quite significant. Case study data indicates that as a general rule, you can calculate that approximately $150,000 to $200,000 in net present value tax savings can be generated for each $1 million of reclassified assets. And because many states follow the federal rules regarding depreciation, it is also possible to save money on state tax returns as well.

Building costs are generally classified for federal income tax purposes into three categories: 1) Tangible personal property, 2) Land improvements, and 3) Real property. Each has a different recovery period and method under the Modified Accelerated Cost Recovery System (MACRS). Our qualified engineering-based analysis is performed by professional personnel with an in-depth knowledge of construction methods, materials, building components and improvements. They do a detailed analysis to properly identify the building components and improvements that will be reclassified to take advantage of accelerated depreciation.

Each study differs depending on whether the building is newly constructed/renovated or purchased as a previously owned building:

New Construction/Renovation

1. Architectural plans
2. AIA document G702/703
3. Project cost reports (if available)
4. Purchased value

Purchased Building (previously owned)

1. Depreciation report
2. Appraisal report
3. Architectural plans (if available)
4. AIA Document G702/703 (if available)
5. Project cost reports (if available)
6. Purchased value

We will assist you in gathering the necessary data.

It has been our experience in the application of cost segregation that the owner of commercial property loses a large part of its benefits because all "accelerated depreciable assets" were not recognized by the "non-engineered" study. Our experience shows that 50%-70% increased positive economic results are achieved through an engineered-based cost segregation study.

Eligible assets are generally assets, fixtures or related elements that are either unnecessary for the operation of the building itself or are temporary structures.
They can include: Certain electrical/mechanical systems, redundant HVAC systems,decorative lighting or moldings, floor coverings, wall coverings, window treatments, signage, sidewalk and curbing, parking lots and curbing, landscaping, fencing and outdoor lighting, swimming pools, foundations, mezzanines, stairs and platforms, sewer and drainage systems, distribution panels and wiring, millwork, vents and exhaust systems, hospitality fixtures, communication systems, specialized air filtration, specialized fire protection systems, security access and monitoring systems and computer data and power.

No. Our cost segregation studies strictly adhere to the IRS Cost Segregation Audit Technique Guidelines.

Sadly, far too many people believe that estate planning is either for the elderly or the wealthy. Nothing could be further from the truth... the need for proper planning applies to every adult in the U.S. regardless of age or net worth. This may not mean that everyone would necessarily need a living trust to bypass probate, but it does mean that virtually every adult should have a living will (advanced healthcare directives), a nomination of conservator (or guardian in some states) in the event you should become incapacitated and powers of attorney granting someone the ability to manage your assets and make healthcare decisions for you if you are incapacitated. Additionally, anyone with minor children should take the time to complete a nomination of guardian document, naming who you would want your children to live with should you and your spouse unexpectedly die. This is extremely important planning that will serve to avoid having to subject your extended family to a painful and costly custody hearing.

The concept of the redistribution of wealth is antiquated and dates back to the turn of the 20th century when the proponderance of America's economy and wealth was in the hands of a limited number of large businesses and wealthy families such as the Vanderbilts, DuPonts, Vanderbilts, Astors, Rockefellers and others. This was at a time when many less fortunate families were very much in favor of the concept of redistributing the vast wealth held by the select few. However, today our economy is based on the efforts of many thousands of entrepreneurs and individuals who have labored long and hard to build their business and amass new wealth.