Cost segregation has been a common practice in the recent years. It has been greatly beneficial for many property owners to convert their commercial estates into a personal property so these may depreciate for a couple of years’ rate.
The purpose of this is to reduce the tax that falls under the liability of the real estate owners, to increase the release of cash that brings more operating investments, and to reclaim previous deductions that have been “missed” in years prior. On top of these, the changes would not affect the previous tax returns that have been granted before.
By definition, cost segregation for property investments is an engineering-based study for owners to lower the value of a property within the allowable amount under the implemented tax law. Because of this, the systematic process is not and cannot be done by a non-professional. There are several important elements that are considered by cost segregation providers to generate accurate reports.
In the same sense, you need to consider several points when choosing a service provider of cost segregation.
These factors will help homeowners and investors pick out the best agency or company for them. When it comes to real estate investing or any form of investing for that matter, taking chances is never an option.
With that, here are the points to weigh in when one needs to choose a cost segregation provider.
Choose based on Experience
Most long-time companies are trusted by many for a reason. They have been through a lot of cases, one that’s different from another, which is why they can handle commercial property issues with confidence. Their years of experience will serve as a guide to help them solve and resolve situations after situations.
Furthermore, the years of a company in service has made them familiar with the past and present tax laws. They have discovered loopholes and other options that may work in a property owner’s favour.
Their countermeasures and techniques have been sharpened and straightened out to work best in different situations. Experts, after all, have become masters in their field.
Experience doesn’t necessarily come from cost segregation work alone but also in related fields.
Experts of Segregation Holding, for example, have held senior management positions in America’s top 10 accounting firms. Combined with their experience in construction, industrial, and civil engineering, they have fine-tuned and honed their cost segregation skills.
Check the Credentials
Aside from experience, companies should also have the credentials to make a cost-segregation study.
Without credentials, the study conducted can be likened to a college student’s research study. The results may be correct but still need verification. A reliable cost segregation report is just as good as those who conducted the study.
A company’s credential is not only limited to its name but to its methods as well.
- Are they verified by corresponding government agencies?
- Do they follow standard practices?
- Is there an auditing trail available and one that is transparent?
These are important matters to have in mind when a real estate owner wants to hire a service provider.
Companies like Segregation Holding have licensed and experienced engineers who can perform thorough studies according to the rules set by the IRS and other government agencies associated with this field.
A good company has good resources they use to conduct the study.
Resources do not just refer to the necessary tools and equipment. These also include connections with people or establishments. Cost segregation is not just a one-man task.
It’s not enough for a company to have the right people who are masters in their task but who are also well-connected. Property owners and investors should choose companies with enough resources so they can perform the study with no compromise.
Should a property owner invest in a provider that does not have the necessary resources and materials for their cost segregation study, the results may or may not be impartial.
In summary, commercial property owners should consult with professionals and experts alone. These owners should hire providers that have the experience, the credentials, and the resources needed to get the job done to ensure the credibility and accuracy of the cost segregation study. Suffice to say that wise choices make the best results.
For more information on construction companies and other service providers, browse through the rest of My Chronicles. Educate yourself about many things, including real estate investing.