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Is Cost Segregation Legitimate?​
The option to accelerate depreciation has been available to taxpayers since 1967, following the introduction of the Internal Revenue Service's Audit Technique Guidelines. This strategy allows property owners to significantly reduce their taxable income, making it especially attractive for larger commercial and industrial property owners who can benefit from the substantial tax savings. However, for small residential property owners, the cost/benefit of properly classifying assets was prohibitive.
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Recent technological changes and improved access to data have made it possible to offer this tax-saving technique available to small reql estate investors.
How does REALTAX SAVER work?
REALTAX SAVER was developed proprietary algorithms to very accurately separate items of personal property and improvements to land from the building components. Applying these processes produces an unchallengeable allocation of construction costs for accelerated depreciation.
Why doesn't My Accountant do this?
Cost segregation, as executed by REALTAX SAVER, is fundamentally an engineering and construction cost estimating function rather than an accounting responsibility. Generally, accountants and CPAs do not possess the specialized training or expertise needed for an in-depth analysis, nor do they typically have access to the essential cost estimating data perform this task.
Will implementing a REALTAX SAVER analysis trigger an audit?
There is no evidence of cost segregation implementation as with REALTAX SAVER triggers an audit. The IRS Audit Technique Guidelines if fact states that reporting assets in the proper depreciation classifications is the correct way to depreciate non-realty components.
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Stated another way, the traditional method of capitalizing real estate by simply separating the land value from the acquisition cost is incorrect.