Frequently Asked Questions
Cost Segregation
Acena's cost segregation process efficiently identifies and reclassifies building assets for accelerated depreciation, maximizing your tax benefits and improving cash flow.
"Acena was a pleasure to work with from start to finish. The entire team was both responsive and knowledgeable as we navigated the cost segregation process for the first time. I cannot recommend Acena enough for this service."
The Acena Approach - Cost Segregation
Efficient - Defensible Process
The IRS Cost Segregation Audit Techniques Guide outlines 13 requirements for a Quality Cost Segregation Study. Our process meets all 13 of the criteria creating a strong, defensible study completed in an efficient and effective manner.
Our Process Includes
- Engineering-based analysis for cost allocations and take-offs.
- Onsite Verification validating assets, measurements, and other property details,
- There is minimal disruption as our onsite verification process is fast and efficient.
Our process is detailed for you below:
Free Estimate of your Potential Tax Savings
Reach out to us by phone or email and let us know your financial goals. Whether you are a seasoned investor or this is your first study, we are here to help guide you seamlessly through the process.
We will create a personalized Benefit Estimate to look at the potential tax savings of a cost segregation study on your property.
We’ll need some basic information regarding your property(s) to understand the correct direction to take.
We are happy to review this with you or your CPA to ensure a thorough comprehension.
By accelerating your depreciation, the increased expense will increase your tax loss and defer your income tax on the rental income to a future year. You've now created opportunities to reinvest those tax dollars into new investments.
Engagement
Once we receive the required documentation, our engineering team will give us the green light to schedule your on-site verification.
We will work with you to gain access to all areas of the property, including closets, maintenance areas, garages, storage rooms, etc.
If there is an onsite property manager, we will work with them to access any secured areas.
Once the OSV has been scheduled, we will photograph and measure all areas of the property. This includes the exterior and interior areas, all rooms, storage, electrical, maintenance, and garages.
Within each area, all items will be inventoried and measured.
The dimensions of each room will be measured and documented, as well as all items, including furniture, wall coverings, flooring, cabinetry, electrical, water, HVAC, ceiling items, etc.
Taking the information provided by the OSV, current building information, public records, and market data, the Engineering team begins their work.
A deep analysis of the property, including underground site improvements, building materials, and structural components, is completed. This information, as well as the OSV inventory and pictures, is combined to provide a complete picture of the property.
The overall cost (or basis) of the property is then allocated to each asset identified during the study on a relative basis. This is the magic of engineering, as the analysis combines the original cost data and asset values following processes allowed under IRS guidelines and court decisions.
Once the Engineers are finished, the information is compiled into a final report, detailing all the assets identified and the assigned cost to each.
We will review the final report with you and confirm the assets identified are accurate and owned. In the event changes are needed, these will be sent back to Engineering for correction before finalizing and approving the report.
Documentation
Here is what we need to get started:
Closing or Settlement Statement - This confirms the purchase price and legal owner of your property and includes - identifies any title changes or recording fees that can be factored into the study.
Prior Year's Depreciation Schedule (if applicable) - If your property has already been placed in service, it may already be on a Depreciation Schedule. Ask your CPA for this documentation.
Appraisal Report (if available) - This provides an accurate assessment of your property's value and helps our engineering team conduct a thorough and precise cost segregation study.
Rental Type (Residential Properties) - Let us know if your residential property is used for short-term rentals (like Airbnb) or long-term rentals (traditional leases).
Other Considerations
Ultimately, using accelerated depreciation generated from a cost segregation study is complex due to passive activity rules. Your CPA can guide you through these rules to analyze your tax situation and advise you appropriately on whether a cost segregation study will benefit you today, tomorrow, or in the future.
Furthermore, tax-free exchanges, the status of being a real estate professional, and income or losses from other rental properties can affect your total financial benefits.
More information on tax-free exchanges and Real Estate Professional status can be found on our Advanced Topics page.
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