MDNews - Central New York

+++++++++++++++++++ + +++ +REAL ESTATE ��� +++ +++++++++++++++++++ Real Estate Finding the Hidden Value By Brian M. Balash AS professionals, we are always trying to provide our clients with a ���value-added approach.��� Most of the time we focus our attention on saving them money through negotiations of a sale or lease, but looking at the transaction isn���t always the right place. One value-added approach that can help inject cash back into a practice is cost segregation. commeRcial Real eState what is cost Segregation? Cost segregation is a federal income tax tool that increases your near-term cash flow, in the form of a deferral. The calculation utilizes shorter recovery periods to accelerate the return on capital from your investment in property. Whether newly constructed, purchased or renovated, the components of your building may be properly classified, through a cost segregation study, into shorter recovery periods for computing depreciation deductions. The study carves out five-, seven- and 15-year lives for certain qualifying portions of your building that are normally buried in a 39-year or 27-year category. Never Heard of cost Segregation? Although cost segregation has been around since 1987, it was primarily unused outside the major accounting firms, which reviewed only very large projects for considerable fees. 20 | Central New York MD News ��� mdNewS.com There were very few experienced professionals who combined both the construction and accounting expertise necessary to perform the study correctly at an affordable cost. Oddly enough, most hospital executives and practice managers may never have heard of cost segregation, but they are part of its legal precedent. Thanks to a lawsuit brought by HCA in Hospital Corporation of America v. Commissioner, 109 T.C. 21 (1997)(���HCA���), the service has become both more common and more cost-effective. what to look for in a consultant You want to make sure that you hire a consultant that specializes in helping real estate owners and investors use cost segregation studies to accelerate overall property depreciation in order to produce a current income tax benefit. You also want to be sure that the firm you hire has a team of construction specialists and tax experts to perform a comprehensive valuation of a building and site improvements, and then allocate the value or cost of all eligible components to certain specific federal tax-depreciable life categories. why does my Practice Need it? Most consulting firms can give you an assessment of potential savings free of charge, so why not explore the opportunity? Cost segregation, when applied properly, can

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