Building Shell
(depreciated over 39 years or 27.5 Years)
Savvy real estate investors generally want to take every reasonable measure to increase their returns. One of the most effective ways to do this is to reduce income tax liability with cost segregation.
Cost segregation accelerates the rate investors can claim tax deductions. By writing off assets faster than traditional straight-line depreciation, your business can reduce its income tax rate, increasing the business's cash flow and profitability.
A dollar today is worth more than a dollar tomorrow
Speak to an expert at 312-697-7187 or fill out the form below.
A Cost Segregation Study requires expertise in engineering and construction, not just tax. That is why most accounting firms leave the cost segregation work to experts like us. Even the National firms with in-house analysts reach out to us to make the tough calls for the projects that need more construction expertise, or to defend their client’s study under audit. We provide your CPA with the substantiation necessary, providing you with all the advantages and opportunities that cost segregation allows, in a fully defensible study.
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By way of a technical construction analysis, our engineering team performs a reconciliation of all building costs to properly reclassify assets into 5, 7 or 15-year property eligible for bonus depreciation. Without a study, the value placed on the building shell is overstated.
(depreciated over 39 years or 27.5 Years)
(depreciated over 5 or 7 years, double declining method)
(depreciated over 15 years, 150% declining balance method)
(non-deprceiable)
Increased depreciation in earlier years
Increased cash flow
Allows for future tax write-offs when structural components are replaced
Creates losses to carry back for a tax refund
Tax benefits also carry forward to future tax years
The cost of the analysis is inexpensive compared to the savings
The Tax Cuts and Jobs Act (TCJA) provides 100% bonus depreciation through the end of 2022.
In prior years, bonus was only extended to new construction. The expansion of bonus depreciation to include acquired properties is creating never before seen benefits.
Acquisition of $4.3M triple net lease big box retail property - total reclassification falls on the lower end of the benefit range of a typical retail property.
The cost segregation analysis reallocated 24% into shorter life 5 and 15 year property. The overall cost/benefit ratio is 53 to 1.
| Without Cost Segregation | Pre-TCJA (no bonus) | Post-TCJA (100% bonus) | |
|---|---|---|---|
| 1st Year Tax Savings | $19,295 | $49,549 | $356,569 |
| 5 Year NPV | $147,109 | $205,179 | $325,894 |
Cost Segregation analysis allows 15% to 80% of construction costs to be written-off faster - over a shorter allowable depreciable life per the IRS - maximizing your cash value, and the value of your investment.
Acquisition or new construction in excess of $500,000?
Expanding an existing facility or undergoing major renovations?
Making leasehold improvements in excess of $200,000?
Have you completed any of the above in the past 10 to 15 years?
A study can be beneficial at any time during the life of the property – beginning in the early design build stage, and even many years after ownership.
Meridian can help you identify the timing that is most advantageous for you based on your entity structure, product type, investment goals and exit strategy of your investment.
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This proactive approach allows our experts to identify potential tax savings, incentives and strategies in the design-build stage resulting in a better documentation trail and tax-related Value Engineering opportunities.
The IRS allows current building owners to go back as far as 1986 and “catch up” on depreciation they could have deducted from the day the property was placed in service, without amending prior tax returns through a simple change in accounting method. Catch up on missed opportunity in prior years including accelerated depreciation, bonus, Qualified Improvement Property (QIP) property, identify dispositions, and opportunities to expense vs capitalize. The depreciation is caught up in the year you do the study.
With a good, detailed study, the opportunity for dispositions is maximized both retroactively, and in current or future years. Has your property undergone frequent renovations via property refresh or tenant turnover, or are you expanding an existing facility or undergoing major renovations?
Note: Cost Segregation can also provide defensible values in determining whether expenditures are capital improvements or deductible repairs
If a business is not currently profitable or the property is a short-term hold, it may not make sense to do a study or it may make sense to wait a few years. Our clients trust us because we are firm in our commitment to do what is right for the client.
We are confident that Meridian’s cost segregation study conclusions will stand up to IRS scrutiny. Their successful audit experience is unmatched in the industry and their in-depth knowledge of the subject matter proved invaluable. We were impressed with the professionalism extended not only to us but to our CPAs during the process.
I was aware that a cost segregation study would likely save us tax dollars since I had them done before. I was initially impressed with Michele Pasquale and the proposal she presented us with and felt that the entire Meridian Team provided us with a very detailed and well documented report. We received a good return for our investment and we are extremely excited about the opportunities that lie ahead.
We were impressed with the team of Michelle, Eric, and Bob at Meridian Financial Solutions. There was exceptional follow-up and communication throughout the project and the final product was very professional.The detailed report was broken out by unit which allows us to dispose of any tenant improvements when the tenant vacates. We were able to re-classify 48% of the property to accelerated life and increased depreciation by 78% in Year One. We will continue to use Meridian to capitalize on tax opportunities for existing and future projects. Good job!
We met with Meridian and quickly grasped the opportunity available to our clients.Within a few months, we have several cost segregation studies underway for client properties. The results, which they document in a very comprehensive report, have been impressive. We will continue to use Meridian as a valuable resource to stay up to date on specialized tax planning opportunities for current and prospectiveclients
I was extremely impressed with the quality of the product and service I received from Meridian. The project engineer was extremely knowledgeable and helpful in educating our internal accounting and real estate development teams. We are incorporating some of their recommendations into our design/build process and accounting is paying more attention to tracking the fixed assets early on. They are true experts in the cost segregation business and we look forward to working with them on future studies!
I am writing to express what a pleasure it was to work with Meridian on two projects this past year. Your competent and experienced staff was able to identify significant tax savings for us. They are documented in comprehensive reports that our CPA is confident are more than sufficient to satisfy IRS scrutiny. I also appreciate your continuing work in conjunction with our CPAs to identify additional opportunities. Based on my experience I most confidently recommend the services of your firm to others.
We were introduced to Meridian in conjunction with our 1031 exchange associate. Together the two qualified my replacement properties based on the tax basis and expected holding period and identified a triple net lease property that was suitable for maximization of tax benefits through cost segregation. Overall the team was very attentive and went above and beyond to track down the appropriate documentation for the study, they even located the original building plans by contacting and coordinating with the original architect who constructed the property. Additionally, they met with our CPA out of state and coordinated with him to ensure the tax basis of the study correlated to the CPA’s books. Not only was my return on investment for the study about 28: 1, but the final study provided my CPA with a complete audit trail and assurance that any questions from the IRS could be easily addressed by the engineering team in the event of an audit.
Through its detailed review and analysis, Meridian’s engineering team identified an additional $43M or 30% of assets that it believes qualify for accelerated depreciation that otherwise may not have been identified or substantiated by a typical cost segregation firm that may not have the experience and qualifications that Meridian’s engineering team possesses.As a result, 93% of our project costs qualified for accelerated depreciation. The study also provided us with great fixed asset detail which will provide us with significant long-term value as we continue to improve, adjust, and expand our operations to adapt to new technologies and dynamic industries. Meridian provided an objective third party opinion allow in guesthouse the study for both book and tax purposes. Asa result of the complexity and scale of our project we benefited significantly from the integration of Meridian’s experienced engineering and specialized tax knowledge within our existing financial team, which resulted in increased value and efficiency that enabled us to secure the best use of our resources.
Meridian was responsive to questions throughout the process and was able to promptly meet our tax filing deadline. In addition, Meridian was flexible enough to make revisions to the initial report for additional costs submitted by the client, as well as project costs that were incurred over a second tax year. Our client was happy with the finished product and we will continue to recommend Meridian to our clients.
Meridian has the experience and proven track record to successfully defend studies before the IRS.
Based on our reputation of favorable outcomes on audits, dispute litigation, and direct dealings with the IRS on landmark tax cases – taxpayers under appeals with other providers’ studies and other providers solicit our advice.
Our lead engineer is recognized by the U.S. Tax Court as an industry expert witness in cost segregation, and has served as a subject matter expert witness on behalf of taxpayers AND the IRS.
Our leadership team has helped shape cost segregation on behalf of taxpayers.
We take the burden of proof off the taxpayer and CPA by providing details for the entire building in a construction format that’s easy for the IRS to follow under audit. With a track record dating back to the late 1980s, we earned the respect of the IRS based on the quality of our studies.
We were told the IRS referenced our lead engineer’s methodology as the standard when drafting the detailed engineering approach to cost segregation in the Audit Techniques Guide.
Meridian’s engineering methodology provides all the advantages and opportunities that cost segregation allows, in a fully defensible study – the key element when undergoing an IRS audit. And, we’re one of a handful of firms that offer a comprehensive work paper file and supporting audit trail with our top-level study.
over 2,000 combined revenue agent reviews (RAR)
On completed projects both pre- and post 2004
CPA reviews
Everything from billion dollar projects to small build-outs
Classified facility inspection with National Security Clearance
More than 18,000 studies of every commercial property type
Projects in all 50 states, Mexico, Europe, the Middle East, and South America
We provide competitive pricing for projects of all types and sizes without compromising quality. Our clients appreciate the combination of value and service they receive, leading to their repeat business.
Leasehold Improvements for Build-Out of Surgery Center in Florida
$6.2M Expansion to Accommodate Tenant Changes for a 20-Year-Old Retail Plaza
New Acquisition of Dental Clinic
We just need basic information about your property to get started:
Property acquisition/construction cost (less land value)
Placed-in-service date
Building square footage/acreage
Property use (manufacturing, office, retail, etc.).
We gather some basic information about your property, business structure and asset strategy in order to provide an illustration of potential tax benefits specific to your property.
Based on the agreed-to scope of services, our cost segregation engineers perform a detailed analysis of your property including a comprehensive site visit.
We provide a fully defensible, “CPA-ready” report based on your specific tax strategies and circumstances.
Knowledge you can trust. Results you can measure.
Meridian Financial Solutions
27 N. Wacker Drive, Suite 427,
Chicago IL 60606
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