Are you looking to lower or in some cases eliminate taxable liability for your business?

This article appeared in the July 02, 2019 edition of Accounting Today:

Cost segregation studies should be in the back pocket of every commercial real estate investor. When optimized, they can increase cash flows, reduce tax liability, and uncover missed deductions. And thanks to the Tax Cuts and Jobs Act of 2017, the benefits are more favorable than ever before.

A cost segregation study is a strategic planning tool that commercial real estate owners and investors can use to improve their tax positions. These studies assess an entity’s real property assets and identify a portion of those costs that can be treated as personal property. By segregating personal property from the building itself, the studies will be able to reassign costs that would have been depreciated over a 39-year period to asset groups that will be depreciated at a much quicker pace, or perhaps even expensed immediately.

The tax reform package made two simple changes – both to bonus depreciation – that will make cost segregation studies more valuable.

Bonus depreciation allows individuals and businesses to immediately deduct a certain percentage of their asset costs the first year they are placed in service. The tax law made used property eligible for bonus treatment for the very first time, and it also increased the bonus percentage to 100 percent through tax year 2022. Prior to this law change, only new property was qualifying, and bonus depreciation was expected to be only 50 percent in 2019.

This means that performing a cost segregation study will now have a stronger impact. Any assets that are removed from the “real property” bucket and placed in the “personal property” bucket may now be eligible for bonus depreciation and can be immediately expensed in the first year.

Consider the following example: A taxpayer purchases a building worth $10 million. After performing a cost segregation study, they can reclassify 10 percent of those costs to be personal property. By assigning these assets a shorter depreciable life, they can apply bonus depreciation and write off $1 million of that $10 million purchase price in Year 1. A taxpayer with a 25 percent marginal tax rate would save $250,000 in taxes, or 2.5 percent of the purchase price, that first year.

Renovated properties may also benefit

A cost segregation study may also come in handy during a renovation, although the reason why is somewhat convoluted.

Back in 2015, well before the Tax Cuts and Jobs Act, a different tax law was passed: The Protecting Americans from Tax Hikes, or PATH, Act. This tax law removed the following three property classifications:

• Qualified leasehold improvement property;
• Qualified restaurant property; and,
• Qualified retail improvement property.

In their stead, it created an asset group called “qualified improvement property.” This new asset group included the same types of 15-year assets as the three groups it had replaced, but it was also written to include certain non-structural improvement assets. Once this law was passed, building improvements like plumbing, ventilation systems, and alarm systems were treated as 15-year assets. This was great news for renovators: They could now depreciate these assets over a shorter, 15-year period.

When the Tax Cuts and Jobs Act was passed two years later, Congress’ intent was to extend bonus depreciation to qualified improvement property. Unfortunately, the appropriate wording did not make it into the tax bill, and qualified improvement property took a major hit. Not only did it never become eligible for bonus depreciation, it reverted back to 39-year property. While we are still hoping for a technical correction, at the moment, qualified improvement property is no better off than real property.

While renovators may feel like they drew the short end of the stick, they can still benefit from a cost segregation study. The purpose of their study should be to identify which assets are not qualified improvement property so that they can depreciate those assets over a three-, five-, or seven-year period and qualify for bonus depreciation.

All taxpayers in the commercial real estate industry – contractors, renovators, purchasers and investors – may benefit from a cost segregation study to determine which of their property qualifies for accelerated depreciation. To help with the study, they should engage qualified professionals with expertise in this area like veteran engineers, quality CPA firms, and others holding the Certified Cost Segregation Professional designation, to help them decide if the benefits will outweigh the costs.

Now you can get a cost seg study performed on a contingency basis, which means no upfront fees!

How quickly can a business get get from $10,000 to $1,000,000?

Generally, this can be done in under a week without any hoops of deep financial inquiries. 

How is that possible? Providers look at cash flow more than credit score and these providers love to get money to business owners.

This great if you have an opportunity you want to pursue, like expansion, or marketing, etc or even if you are ever in a tight pinch and need some help to get out of a that situation.

Yes, you can actually get a decision in as fast 1-2 days and funds in a week. The best part is there is a very high approval rate and a simple application process. 

And what if you don't have a current need for funds? That’s fine, no worries, keep us in mind, you never know, an idea might pop up now that you know you could get money to help your business grow. and if you know of any other business owners, let them know we exist. We’d love to help them out too.

Generally, it is about what you are doing in monthly sales, and the great thing is that all that is needed is a short one-page application to get started and within a day or so we can have you an offer. It’s free to apply and there’s no obligation to accept the offer.  

You can learn more here and even fill out a pre qualification form in under 5 minutes. 

Business loan closing rates of 80%

Presently, closing rates for banks are less than 20% and on any given year, approximately 15 million US main street businesses are going to apply for loans and only 18-19% are going to be successful.

Statistically, 59% of the loans are for some form of expansion and that dovetails into what we do.

We look at cash flow enhancement, we look at expense and tax mitigation. In other words, we first look at enhanced profitability. Invest in your employees, invest in your infrastructure, invest in the next stage, that is the 59% mentioned above. Now, what about the other 41%? They are pursued for the purposes of survival, to make payroll, to keep the lights on.

We are an organic organization in that we don't worry about focusing on one particular product. We work on focusing on the client as a whole and bringing everything to the table and identifying what they need to best suit them. With our software (which we don't sell) we can often increase their profitability 5, 10, 15 and even sometimes, 20% at NO cost or risk to them. We drastically impact them to that end while at the same time facilitating enhanced odds they they'll actually qualify for a loan!

So, why are our closing rates 80%?

When you to go to a bank, you're working with that bank. It's limited options, it's limited criteria. With us, we can pickup the phone and reach the senior vice-president of hedge funds and throw questions out to them about your loan, so that makes a big difference. We can go direct to our group of 129 lenders and in addition, we are part of two networks that takes us out to every viable lender in the nation where all we have to do is put in a quick scenario and get multiple replies from those lenders, either yes, no, maybe give us a little more information. We have 15 hedge funds that we work with while focusing on two or three of them. Primarily, one of them has a four billion dollar portfolio, so they're very very deep and they just will go way out. We just got a request for nine loans from one owner of a particular industry and four of them were just not going to happen. Our head lender looked at the whole package and said "we'll do all of them together because the big ones are outweighing the little ones". That's the kind of communication we have with them!

That had been shopped like mad. It had been seen by everybody and nobody was going to touch it, nobody was going to do it. Then all of a sudden, impossible became possible! It's because of what we have built for the last quarter century. We can pickup the phone and speak to the underwriter or the senior vice-president and say "how can we make this happen?" They know we will work our fingers to the bone to get them everything they need, so they won't have to do that. They don't have to chase our clients, they don't have to ask for paperwork, we ask for it and get it from them. And that makes a big difference as to how far out in the field our lenders will go for us.

Other things we do: There are only a few brokers in the US that even do securities portfolio lending. And that is where someone has a security portfolio, and literally stocks, bonds, mutual funds and we're able to do lending against that. And yet they still get to keep them.

Another scenario is when people come in with a 401k or an IRA and we are able to convert that to another type of tax deferred entity and get money out for them to use for investments.

The bottom line is that if your company is in the US, we are more than likely to get you financing. It takes 5-minutes to get the ball rolling. Just answer 2 questions at BusinessRefundEstimate.com

Brokers welcome!

5 reasons why your business might need a loan.

1. Expansion. Probably the most obvious reason to consider a small business loan is to invest in an expansion opportunity for your business. ...

2. Inventory. ...

3. Cash Flow. ...

4. Equipment. ...

5. To Improve Terms on a Larger Loan. ...

We have several types available for US businesses as shown below and it takes is for you to answer 7 questions here and we can set the wheels in motion right away.

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Can a condo development or apartment building benefit from a Cost Segregation Study?

Yes, they can!  Condominiums fall under a multi-family category which also includes properties such as apartments, hotels and residential-type facilities that house people either temporarily or for an extended time up to and including life.

Many factors play in computing the depreciation on properties of this type including where they are located, how much land is included and what land improvements apply.

Condominiums can be located in suburban areas and they can be found just as often in metropolitan areas as high rise buildings.  The difference in these two property scenarios should be obvious, the suburban location would include a significant number of land improvements and the high rise would only have a small portion of cost basis that could be allocated to land improvements.

Additional considerations in calculating a benefit for condominiums would be; how many units the property contains, what amenities are located on the property (e.g., swimming pools, tennis courts, clubhouses and or fitness centers).

If you own or know someone who owns a condominium property and would like to find out if they would benefit from a Cost Segregation Study, simply schedule a Discovery Call with a National Account Manager today by answering 2 simple questions at  PropertyTaxBenefits.com

No upfront fees!