Introduction to Cost Segregation Chris Hitselberger Senior Managing Director & National Practice...
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Introduction to Cost Segregation Chris Hitselberger Senior Managing Director & National Practice Leader Eli Varol Managing Director - Midwest
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Transcript of Introduction to Cost Segregation Chris Hitselberger Senior Managing Director & National Practice...
Introduction to Cost Segregation
Chris Hitselberger
Senior Managing Director &
National Practice Leader
Eli Varol
Managing Director - Midwest
CB Richard Ellis | Page 2
COST SEGREGATION - What is it?
An IRS Recognized Method Of Creating $30,000 to $150,000 Of Tax Benefits per $1,000,000 Of A
Building’s Cost.
CB Richard Ellis | Page 3
COST SEGREGATION - What is it?
The identification of specific building components that can be treated as
Personal – Section 1245 Property
Site Improvements – Section 1245 or 1250
(tax life of 5, 7 and 15 years) rather than
Real – Section 1250 Property (tax lives of 27.5 or 39 years)
CB Richard Ellis | Page 4
Potential Tax Benefits
COST SEGREGATION - What is it?
CB Richard Ellis | Page 5
Building Component Depreciation
An unobtrusive, yet detailed engineering study of a building’s:
Electrical
Lighting
Plumbing
Heating & Cooling
Ceiling
Walls
Flooring
Landscaping & Sitework
How it Works
CB Richard Ellis | Page 6
How it Works
CB Richard Ellis | Page 7
How it Works
CB Richard Ellis | Page 8
Examples of Qualifying Components
CB Richard Ellis | Page 9
Marketing & Selling
Collateral And SupportEli Varol will provide tax benefit projections, info gathering sheets, supply collateral and support your marketing activities.
What We Need To Know
1) What Is The Business Activity In The Building?The business activity determines how complex the build-out is. A restaurant is more complex than an office, which is more complex than a distribution center. This determines the rate at which we can gather data.
2) How Many Square Feet Is The Subject Property?This determines the time involved and the fee.
3) What Is The Tax Basis = Purchase Price Less Land?This determines the amount of the tax benefits.
CB Richard Ellis | Page 10
Typical Marketing Process
1. Identify CBRE client that is buying real property, is constructing a new building, or is adding improvements to a building. Remember that is also valuable to real property & improvements made in past years.
2. Set up a conference call with cost segregation MD or fill out a questionnaire provided.
3. Cost Segregation group can immediately respond with an arrangement letter and a conservative/optimistic estimate of present value benefit.
4. Project can begin upon receiving signed engagement letter & retainer.
Fees vary significantly based on scope. Average fee is $10,000
January through April is our typical “busy season”
CB Richard Ellis | Page 11
Questions?
Chris Hitselberger
(212) 425-4300 x106
1156 Avenue of the Americas, Suite 703
New York, NY 10036
Eli Varol
(312) 416-3081
222 South Riverside Drive, 27th Floor
Chicago, IL 60606
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