Insights
Deal Team M&A Insights Through Mid-2024
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What We Offer
OVERVIEW AND EXPERIENCE
A cost segregation study can reduce your tax liability and increase cash flow.
If you have expanded or performed tenant improvements on a commercial real estate property, or have an existing, recently acquired, newly constructed or renovated property, a cost segregation study could be your next tax savings tool!
What is a cost segregation study?
A cost segregation study is a tax savings tool that allows commercial real estate owners to maximize their depreciation expense by reclassifying assets into shorter recovery lives.
A commercial property is typically depreciated over a 27.5-year (residential), or 39-year (non-residential) recovery period. A cost segregation professional identifies personal property assets such as specialty finishes, millwork, specialty electrical, plumbing and mechanical items, and land improvements that can be reclassified into 5-, 7-, or 15-year property.
On average, a study reclassifies 20-40% of the depreciable basis costs. With the application of a study, assets which qualify as 5-,7-, and 15-year recovery period increase current year depreciation expense, reducing tax liability and increasing cash flow. This allows you to invest this savings into your business.
Bonus depreciation
Cost segregation studies are more beneficial now more than ever with the application of bonus depreciation. Under the Tax Cuts and Jobs Act (TCJA), assets placed into service after September 28, 2017, with a Modified Accelerated Cost Recovery System class life of 20 years or less are eligible for 100% bonus depreciation through December 31, 2022. Bonus depreciation rates will decline by 20% each year thereafter.
Assets qualifying for 100% bonus depreciation are fully deductible in the first year, increasing current year depreciation expense, as well as maximizing tax benefits.
Qualified improvement property
Another provision of the TCJA can be applied if you own a property which has been improved. Properties which have interior improvements made to an already existing building structure may have additional assets that would typically be depreciated over a 39-year recovery life, now qualify to be reclassified as 15-year qualified improvement property (QIP).
Examples of assets that qualify as 15-year QIP include interior finishes, interior doors, electrical systems, plumbing systems, and interior HVAC components. In addition, the 15-year QIP assets qualify for 100% bonus depreciation treatment and are fully deductible in the first year.
While the average results of a standard cost segregation study reclassify 20-40% of the depreciable cost basis, a renovated property that qualifies for QIP assets can reclassify up to 100% of the renovation costs. Any improvements made to the exterior structure of the building such as siding, exterior doors, roof systems, and exterior HVAC equipment will not qualify for 15-year QIP treatment.
Applications
Industries that could benefit from a study include, but are not limited to: multi-family residential homes, hotels, assisted living, retail shopping centers, grocery stores, light-industrial, manufacturing, warehouse, shipping centers, self-storage, restaurants, auto-body dealerships, auto-body repair shops, business and medical office suites, specialty medical facilities, hospitals, veterinary clinics, dry cleaners, and child daycare facilities.
Cost segregation studies can be beneficial to projects big and small in building size and in cost. An estimate of benefit can help determine if a cost segregation study is the right choice for the property.
OUR PROFESSIONALS
DENNIS LAPORTE
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
DENNIS LAPORTE
Partner, UHY LLP
Managing Director, UHY Advisors
LAUREN OUIMET
Principal, UHY Advisors
ROBERT LICKWAR
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington, Connecticut
ROBERT LICKWAR
Partner, UHY LLP
Managing Director, UHY Advisors
NANCY PATZWAHL
Principal, UHY Advisors
AMY BLOOM
Partner, UHY LLP
Managing Director, UHY Advisors
MARK CRONIN
Principal, UHY Advisors
MICHELE BROWN
Principal, UHY Advisors
DAVID HOUSTON
Partner, UHY LLP
Managing Director, UHY Advisors
MARC ROSEN
Principal, UHY Advisors
DAVE WATSON
Partner, UHY LLP
Managing Director, UHY Advisors
COREY MASSELLA
Partner, UHY LLP
Managing Director, UHY Advisors
New York, New York
COREY MASSELLA
Partner, UHY LLP
Managing Director, UHY Advisors
RALPH MIRANDO
Partner, UHY LLP
Managing Director, UHY Advisors
PAUL TRUBER
Managing Director, UHY Advisors
Partner, UHY LLP
STEVE GOESTENKORS
Partner, UHY LLP
Managing Director, UHY Advisors
St. Louis, Missouri
STEVE GOESTENKORS
Partner, UHY LLP
Managing Director, UHY Advisors
RONALD HICKMAN
Partner, UHY LLP
Managing Director, UHY Advisors
Salisbury, Maryland
RONALD HICKMAN
Partner, UHY LLP
Managing Director, UHY Advisors
PAMELA MAY
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
PAMELA MAY
Partner, UHY LLP
Managing Director, UHY Advisors
MARIE MCKAY
Partner, UHY LLPManaging Director, UHY Advisors
Manchester, New Hampshire
MARIE MCKAY
Partner, UHY LLPManaging Director, UHY Advisors
DANIEL FELSTOW
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
DANIEL FELSTOW
Partner, UHY LLP
Managing Director, UHY Advisors
HEATHER BENSON
Director of Cost Segregation, UHY Advisors
Sterling Heights, Michigan
HEATHER BENSON
Director of Cost Segregation, UHY Advisors
DANIEL MARKEY
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
DANIEL MARKEY
Partner, UHY LLP
Managing Director, UHY Advisors
MONISH BANGA
Office Managing Partner, UHY LLPManaging Director, UHY Advisors
McLean, Virginia
MONISH BANGA
Office Managing Partner, UHY LLPManaging Director, UHY Advisors
JANEEN ARMSTRONG
Principal, UHY Advisors
TODD KELLEY
Partner, UHY LLP
Managing Director, UHY Advisors
KEITH MOORE
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
KEITH MOORE
Partner, UHY LLP
Managing Director, UHY Advisors
MATTHEW MUNN
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
MATTHEW MUNN
Partner, UHY LLP
Managing Director, UHY Advisors
JOHN SALEMI
Office Managing Partner, Farmington, UHY LLP
Managing Director, UHY Advisors
Farmington, Connecticut
JOHN SALEMI
Office Managing Partner, Farmington, UHY LLP
Managing Director, UHY Advisors
DAVE HOVE
Partner, UHY LLP
Managing Director, UHY Advisors
SCOTT MCRUER
Partner, UHY LLP
Managing Director, UHY Advisors
Kansas City, Missouri
SCOTT MCRUER
Partner, UHY LLP
Managing Director, UHY Advisors
THOMAS CALLAN
Great Lakes Regional Managing Director, UHY Advisors
Farmington Hills, Michigan
THOMAS CALLAN
Great Lakes Regional Managing Director, UHY Advisors
BRADLEY CUMMINGS
Partner, UHY LLP
Managing Director, UHY Advisors
Catskill, New York
BRADLEY CUMMINGS
Partner, UHY LLP
Managing Director, UHY Advisors
JEAN HOWE LOSSI
Principal, UHY Advisors
ROY GEISER
Partner, UHY LLP
Managing Director, UHY Advisors
ROANNA CAMPBELL
Principal, UHY Advisors
JOHN GALLO
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
JOHN GALLO
Partner, UHY LLP
Managing Director, UHY Advisors
DANIEL KEY
Principal, UHY Advisors
NICK FLORIO
Principal, UHY Advisors
TODD BENSLEY
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
TODD BENSLEY
Partner, UHY LLP
Managing Director, UHY Advisors
LEO VARNER
Principal, UHY Advisors
MICHAEL ZMOROD
Partner, UHY LLP
Managing Director, UHY Advisors
Long Island, New York
MICHAEL ZMOROD
Partner, UHY LLP
Managing Director, UHY Advisors
MARK WELSH
Partner, UHY LLP
Managing Director, UHY Advisors
PATRICK STARK
Partner, UHY LLP
Managing Director, UHY Advisors
St. Louis, Missouri
PATRICK STARK
Partner, UHY LLP
Managing Director, UHY Advisors
EMILY UPPLEGER
Principal, UHY Advisors
WILLIAM LACY
Principal, UHY Advisors
GREGORY PEARSON
Partner, UHY LLP
Managing Director, UHY Advisors
St. Louis, Missouri
GREGORY PEARSON
Partner, UHY LLP
Managing Director, UHY Advisors
WILLIAM KINGSLEY
Partner, UHY LLP
Managing Director, UHY Advisors
Detroit, Michigan
WILLIAM KINGSLEY
Partner, UHY LLP
Managing Director, UHY Advisors
KATHERINE JUAREZ
Principal, UHY Advisors
JUAN SANTANA
Principal, UHY Advisors
SCOTT VENTLINE
Partner, UHY LLP
Managing Director, UHY Advisors
PAUL JUFFER
Partner, UHY LLP
Managing Director, UHY Advisors
ANGELA KOPRIVA
Principal, UHY LLP
DENISE PISCIOTTA
Partner, UHY LLP
Managing Director, UHY Advisors
St. Louis, Missouri
DENISE PISCIOTTA
Partner, UHY LLP
Managing Director, UHY Advisors
MICHAEL COOL
Partner, UHY LLPManaging Director, UHY Advisors
MARTHA A. JAECKLE
Partner, UHY LLPManaging Director, UHY Advisors
Garden City, New York
MARTHA A. JAECKLE
Partner, UHY LLPManaging Director, UHY Advisors
SUSAN MAAS
Principal, UHY Advisors
KYLE WOIWOOD
Partner, UHY LLP
Managing Director, UHY Advisors
PAMELA MOSIELLO
Partner, UHY LLP
Managing Director, UHY Advisors
New York, New York
PAMELA MOSIELLO
Partner, UHY LLP
Managing Director, UHY Advisors
TRENT MULDER
Partner, UHY LLPManaging Director, UHY Advisors
STEVEN MARESCA
Principal, UHY Advisors
WALTER FOLEY
Partner, UHY LLPManaging Director, UHY Advisors
Long Island, New York
WALTER FOLEY
Partner, UHY LLPManaging Director, UHY Advisors
SHELLEY ROMANO
Partner, UHY LLP
Managing Director, UHY Advisors
Columbia, Maryland
SHELLEY ROMANO
Partner, UHY LLP
Managing Director, UHY Advisors
SCOTT MACCALLUM
Principal, UHY LLP
SUZANNE MULDOON
Principal, UHY Advisors
MEHMET UGUR
Partner, UHY LLP
Managing Director, UHY Advisors
ROBERT POTTER
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
ROBERT POTTER
Partner, UHY LLP
Managing Director, UHY Advisors
MICHAEL TURNBULL
Partner, UHY LLP
Managing Director, UHY Advisors
Port Huron, Michigan
MICHAEL TURNBULL
Partner, UHY LLP
Managing Director, UHY Advisors
COLETTE CAHILL
Partner, UHY LLPManaging Director, UHY Advisors
JAMES DANIELS
Partner, UHY LLP
Managing Director, UHY Advisors
BEN RAYMOND
Principal, UHY Advisors
KATHY CROCKETT
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
KATHY CROCKETT
Partner, UHY LLP
Managing Director, UHY Advisors
MARC RUBIN
Partner, UHY LLP
Managing Director, UHY Advisors
BILL SUTTON
Principal, UHY Advisors
MICHAEL OKENQUIST
Office Managing Partner - Wayland, UHY LLPManaging Director, UHY Advisors
Wayland, Massachusetts
MICHAEL OKENQUIST
Office Managing Partner - Wayland, UHY LLPManaging Director, UHY Advisors
HAROLD MOHN JR.
Office Managing Partner - Columbia, UHY LLPMid-Atlantic Regional Managing Director, UHY Advisors
Columbia, Maryland
HAROLD MOHN JR.
Office Managing Partner - Columbia, UHY LLPMid-Atlantic Regional Managing Director, UHY Advisors
N. THÉRÈSE WOLFE
Partner, UHY LLP
Managing Director, UHY Advisors
Hudson, New York
N. THÉRÈSE WOLFE
Partner, UHY LLP
Managing Director, UHY Advisors
LARRY JOURDEN
Partner, UHY LLP
Managing Director, UHY Advisors
St. Louis, Missouri
LARRY JOURDEN
Partner, UHY LLP
Managing Director, UHY Advisors
MATT MARTINA
Partner, UHY LLP
Managing Director, UHY Advisors
DEBRA PELLERITO
Partner, UHY LLP
Managing Director, UHY Advisors
Kalamazoo, Michigan
DEBRA PELLERITO
Partner, UHY LLP
Managing Director, UHY Advisors
TODD TIGGES
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
TODD TIGGES
Partner, UHY LLP
Managing Director, UHY Advisors
KERRY GARNER
Managing Director, UHY Advisors
ALISON DUNLEAVY
Principal, UHY Advisors
LONI WINKLER
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
LONI WINKLER
Partner, UHY LLP
Managing Director, UHY Advisors
CRAIG BALLENTINE
Managing Director, UHY Advisors
RICHARD KOSKEY
Principal, UHY Advisors
DANIEL ENSOR
Principal, UHY LLP
MICHAEL LANDERS
Partner, UHY LLP
Managing Director, UHY Advisors
ERIC HANANEL
Principal, UHY Advisors
JOSEPH FALANGA
Managing Director, UHY Advisors
ROBERT BOESIGER
Partner, UHY LLP
Managing Director, UHY Advisors
Detroit, Michigan
ROBERT BOESIGER
Partner, UHY LLP
Managing Director, UHY Advisors
PETER WASKUL
Principal, UHY Advisors
JIE CHEN
Partner, UHY LLPManaging Director, UHY Advisors
DONNA FRYE
Director of Transfer Pricing, UHY Advisors
RYAN HOWELL
Partner, UHY LLPManaging Director, UHY Advisors
VENUS WU
Partner, UHY LLP
Managing Director, UHY Advisors
JO LYNN MANNS
Principal, UHY Advisors
KERRY SANTOPIETRO
Principal, UHY Advisors
GORDON FOLLMER
Managing Director, UHY Advisors
SCOTT HUNTER
Partner, UHY LLPManaging Director, UHY Advisors
SCOTT EARLS
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
SCOTT EARLS
Partner, UHY LLP
Managing Director, UHY Advisors
JENNIFER WOOLF
Principal, UHY LLP
VINCE NESLINE
Principal, UHY Advisors
F. MICHAEL ZOVISTOSKI
Partner, UHY LLP
Managing Director, UHY Advisors
Albany, New York
F. MICHAEL ZOVISTOSKI
Partner, UHY LLP
Managing Director, UHY Advisors
NEHA NATHWANI
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington, Connecticut
NEHA NATHWANI
Partner, UHY LLP
Managing Director, UHY Advisors
THOMAS SENA
Principal, UHY Advisors
MICHELLE DYER
Principal, UHY Advisors
JIM VALK
Office Managing Partner, Dowagiac & Kalamazoo, UHY LLP
Managing Director, UHY Advisors
Kalamazoo, Michigan
JIM VALK
Office Managing Partner, Dowagiac & Kalamazoo, UHY LLP
Managing Director, UHY Advisors
CHRIS HALL
Office Managing Partner, Salisbury, UHY LLP
Managing Director, UHY Advisors
Salisbury, Maryland
CHRIS HALL
Office Managing Partner, Salisbury, UHY LLP
Managing Director, UHY Advisors
STEPHEN SLATER
Partner, UHY LLP
Managing Director, UHY Advisors
New York, New York
STEPHEN SLATER
Partner, UHY LLP
Managing Director, UHY Advisors
JOHN KINCAID
Partner, UHY LLP
Managing Director, UHY Advisors
A. MICHAEL BUCCI
Partner, UHY LLP
Managing Director, UHY Advisors
Hudson, New York
A. MICHAEL BUCCI
Partner, UHY LLP
Managing Director, UHY Advisors
BRENT JONES
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
BRENT JONES
Partner, UHY LLP
Managing Director, UHY Advisors
MICHAEL VIZZIE
Principal, UHY Advisors
ERIC SCARINGE
Principal, UHY Advisors
DENNIS PETRI
Partner, UHY LLP
Managing Director, UHY Advisors
Sterling Heights, Michigan
DENNIS PETRI
Partner, UHY LLP
Managing Director, UHY Advisors
ANTHONY FRABOTTA
Partner, UHY LLP
Chairman Emeritus, UHY Advisors
Sterling Heights, Michigan
ANTHONY FRABOTTA
Partner, UHY LLP
Chairman Emeritus, UHY Advisors
MARK WITTE
Partner, UHY LLP
Managing Director, UHY Advisors
TINA STEINBECK
Principal, UHY Advisors
RHONDA NEWMAN
Partner, UHY LLP
Managing Director, UHY Advisors
Kalamazoo, Michigan
RHONDA NEWMAN
Partner, UHY LLP
Managing Director, UHY Advisors
RALPH ZERBONIA
Principal, UHY Advisors
LARRY SILVERSTEIN
Principal, UHY Advisors
STEPHEN F. WOLF
Partner, UHY LLP
Managing Director, UHY Advisors
Columbia, Maryland
STEPHEN F. WOLF
Partner, UHY LLP
Managing Director, UHY Advisors
PATRICK GREGORY
Partner, UHY LLP
Managing Director, UHY Advisors
Farmington Hills, Michigan
PATRICK GREGORY
Partner, UHY LLP
Managing Director, UHY Advisors
BHAARATH REDDY
Partner, UHY LLPManaging Director, UHY Advisors
Farmington Hills, Michigan
BHAARATH REDDY
Partner, UHY LLPManaging Director, UHY Advisors
CHUCK SOCKETT
Partner, UHY LLP
Managing Director, UHY Advisors
DAISUKE TERAKAWA
Principal, UHY Advisors
CHRISTOPHER OLIVA
Partner, UHY LLP
Managing Director, UHY Advisors
New York, New York
CHRISTOPHER OLIVA
Partner, UHY LLP
Managing Director, UHY Advisors