CostSeg Energy Solutions

CostSeg Energy Solutions

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  1 Bethesda Networking Trust JerryLotz February 21, 2018 Cost Segregation - TPR Implementation
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  CostSeg Energy Solutions Copyright© 2018 2 TAX SAVINGS SOLUTIONS FOR BUILDING OWNERS/LESSEES Increase Cash Flow and IRS Compliance February 21, 2018 Jerry Lotz Cost Segregation - TPR Implementation
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  ©2018 3 Who is CSSI? TaxSavings…. Delivered…. • Performing Engineering-based Studies for over 15 years • 16,000+ Studies completed across the U.S. • CEO - Jim Shreve, has been involved in Cost Segregation since the Original IRS court case in 1997 • Full Engineering-Based Studies completed in 6-8 weeks. Disposition & Cost Segregation Tangible Property Regulation/Repair Regulation Calculations Capital to Expense Reversals LED Lighting Retrofits and Tax Benefits Associated Section 179D Energy Credit Analysis Quality Improvement Property (QIP) Calculations R&D Tax Credit Analysis Cost Segregation - TPR Implementation
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  CostSeg Energy Solutions Copyright© 2017 4 FEDERAL Income Tax Deductions • Personal - Mortgage Interest, Child Care, Medical, etc. • Business - Depreciation, Payroll, Interest, etc... • Both look to MAXIMIZE Deductions to Offset Income Cost Segregation - TPR Implementation
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  How? Cost Segregation =Cash Flow ©2018 5 What is Cost Segregation? • The process of analyzing and identifying residential rental/multi-family or commercial building components that are eligible for accelerated depreciation, providing a significant tax benefit for the taxpayer • Engineering-based is defined as the “Certain Method” by the IRS • Accelerating Depreciation increases expense deductions to offset the income RESULT = TAX SAVINGS = CASH FLOW • Client can use the cash today instead of leaving with the IRS for 27.5 or 39 years Personal Property is Segregated from Real Property $50k to $80k in Savings per $1 Million in Basis Works on $250k+ buildings Cost Segregation - TPR Implementation
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  ©2018 Cost Segregation -TPR Implementation Explaining Cost Segregation Straight-Line • Hamburger Cost Segregation • 2 All Beef Patties • Special Sauce • Lettuce • Cheese • Pickles • Onions on a • Sesame Seed Bun 6
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  Explaining Cost Segregation ©2017 7Cost Segregation - TPR Implementation 5 & 7 Year Property  Decorative building elements, wallpaper  Specialty electrical, plumbing, mechanical  Carpet, flooring, crown moldings,  Built In cabinets, counter tops  Security, special lighting, window treatments  Communications, cable  Kitchen fixtures, refrigeration equipment 15 Year Property  Landscaping, paving, fencing, site utilities, parking lot, signage, sidewalks, sprinklers, walkways Cost Segregation vs Straight-Line Depreciation
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  Cost Segregation -TAX Cuts & Jobs Act HUGE ADVANTAGE ©2017 8 Cost Segregation - TPR Implementation • 5yr., 7yr. and 15yr. property placed in-service after Sept. 27, 2017 and for the NEXT five years is allowed 100% BONUS DEPRECIATION! • Roughly 15-25% of the total building asset is NOW eligible for 100% bonus in year ONE • New construction or old construction qualify This is a GAMECHANGER!!!!!
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  . Any BuildingUSA Building Cost $ 2,200,000 2018 2022 Date Acquired: January 2017 Tax Year: 2017 Current Method Accumulated Depreciation Reported 27.5 year straight line method $ 76,670 $ 156,662 $ 476,630 Alternative Method Cost Segregation Study Accumulated Depreciation 5 yr. $ 74,800 $ 194,480 $ 374,000 15 yr. $ 7,700 $ 22,330 $ 67,612 27.5 yr. $ 58,269 $ 119,063 $ 362,239 Total $ 140,769 $ 335,873 $ 803,851 Results for Tax Year: 2017 2018 2022 Increased Accumulated Depreciation Expense $ 64,099 $ 179,211 $ 327,221 Tax Rate (Estimated) 39.6% 39.6% 39.6% Estimated Accumulated Tax Savings Benefit $ 25,383 $ 70,968 $ 129,580
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  . Any BuildingUSA
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  . Any BuildingUSA
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  . Any BuildingUSA WHO Qualifies and WHO Benefits • Owners and sometimes leaseholders of residential rental, multi- family, and commercial property • Properties newly bought, newly built, remodeled and even those owned for a number of years • Manufacturers, Food Processing Plants, Poultry Farms • Warehouses, Residential Rentals, Apartments, Condos, Hotels • Auto Dealers, Franchises, Restaurants, Supermarkets, Offices • Retail Malls, Strip Centers, Medical/Dental Bldgs., Laboratories • Nursing and Assisted Living Facilities, Hospitals, Funeral Homes • Refineries, Self Storage locations, All Types of Buildings….
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  Stay Compliant MovingForward Building Systems Definition 13 EXP/CAP TEST - Client spends $50,000 on HVAC System. TPR ratio test is 30-35%. 50,000/179,747 = 28%. Test says to expense. Train the staff to do this for these items at time of expenditure. Cost Segregation - TPR Implementation ©2017
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  Case Studies - CostSegregation and Partial Disposition 14 Climate Control $3,150,750 Self-Storage Tax Savings Benefit: $ 164,682 Cost Segregation Partial Disposition Auto Dealership Cost Segregation - TPR Implementation ©2017 Cost Basis Condo $324,000 Tax Savings Benefit: $ 30,609 Office Warehouse $5,246,900 Tax Savings Benefit: $ 312,687
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  Capital to ExpenseReversal Examples $$ ©2017 15 Cost Segregation - TPR Implementation Apartment Complex • Purchased in 1993 • Cost $1.1 million • Improvements over years – $4 million, $160k, $2.7million, $70k, $26K, $900k Resulted in Tax Savings of $554,000 Office Building Converted to Hotel • Purchased in 2000 • Cost $1.6 million • Multiple Improvements – $10 million, $1.2 million, $41K, $30K Resulted in Tax Savings of $1.1 Million Office Building • Purchased in 2007 • Cost $560,250 Resulted in Tax Savings of $69,800 Self Storage • Purchased in 2016 • Cost $2,460,000 Resulted in Tax Savings of $44,654
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  It is Easyto Start! © 2018 16 We will provide a No-Cost Analysis of Your Commercial Property Data Required Client’s Depreciation Schedule OR – Type of Building – Cost Basis – Year and month acquired – Improvement (Year and month + Cost) CSSI will generate a no-cost analysis for you. Cost Segregation - TPR Implementation
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  Let’s Get Started ©2018 17 JerryLotz Savings Advisor CostSeg Energy Solutions [email protected] 410-878-2553 Cost Segregation - TPR Implementation Let US Help Reduce Your Income Taxes! www.CostSegES.com Let Us Provide a No Cost Analysis for You!