A 100-year-old, six-story, 10,328 sq. ft. downtown office building
All cost segregation studies are designed to identify assets that can be depreciated more quickly than buildings, to reduce the tax liability and improve cash flow in the early years of ownership. This project was unusual because it involved the renovation of an existing building rather than the purchase of a new one. Because we didn’t have the original building drawings for this 100-year-old building, we had to use our engineering expertise to identify the components eligible for accelerated depreciation. We also had to think creatively to recognize, for example, that the operating cost of utilities could be treated as a tangible asset, eligible for accelerated depreciation. As with most urban structures, most of the value in this small building was in the assets inside – in the office space on the top floors and in the retail space and restaurant on the ground level. Identifying those assets and classifying them correctly, consistent with IRS guidelines, was essential to maximize the tax benefits for the client.
Cost segregation analysis requires an understanding of buildings, tax rules and business operations. Criterium Engineers is one of the few consulting engineering companies with expertise in all those areas. Our experienced professional engineers are equally adept at reading blueprints, cash flow ledgers and IRS rules.