Why is it important to have a cost segregation study done for your property? How will it benefit multifamily syndicators? Today we answer these questions in our #Highlights episode with Bill Smith of ELB Consulting Inc. and Frank Giudici of Bedford Cost Segregation.
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Bill talks in-depth about cost segregation – why you have to have it and when’s the best time to have it. Meantime, Frank clears up some of the most common cost segregation misnomers. Listen now to know the ins and outs of this process!
Key Points From This Episode:
- Bill talks about his role as the Regional Director and National Director for ELB Consulting.
- Bill defines cost segregation as a method to dissect the building down to all its components.
- The real goal for cost segregation is cash flow.
- When’s the best time to have a cost segregation study done?
- Is there any time that a cost segregation study is not needed?
- What size of the property should we start to consider a cost segregation study for?
- Any non-residential, income-generating property, is a cost segregation study candidate.
- Why the IRS doesn’t require you to adjust previous years’ tax returns for backdated cost segregation studies.
- Two more common misnomers about cost segregation that Frank debunks.
“Cost segregation is a method to dissect the building down to all its component parts and short life them into ways to accelerate the depreciation.” – Bill Smith
“The best time to do it (cost segregation study) is now. You could have bought a property five or ten years ago and we can do a look-back study. You’ve been doing straight-line depreciation on these past five or ten years and it was a large enough property. There was enough meat on the bone, so to speak. We can do a look back study, catch up what you’ve taken a straight line to accelerate all the current properties, and then you get a lump sum of deductions in the current tax year.” – Bill Smith
“Any one of those three options; significant renovation, acquisition, new build construction. Over the past 15 years, you have had the ability. You are a potential candidate to have a cost segregation study done.” – Frank Giudici
“Cost segregation is a tax deferral strategy. It’s the time value of money.” – Frank Giudici
Links Mentioned in Today’s Episode:
About Bill Smith
Bill Smith, National Sales Director for ELB Consulting, Inc. works with commercial real estate (CRE) owners and investors to reduce their federal tax burden and improve their cash flow to invest in more properties.
After spending 20+ years in executive sales/marketing and management positions for both Fortune 500 and entrepreneurial firms in real estate finance technology and services, Bill teamed with ELB in 2013 turning his considerable experience into the specialty tax solutions business.
As a specialty tax firm, ELB utilizes a proprietary engineering methodology for its client solutions. This approach maximizes the allowable IRS tax deductions by documenting all building components, both accelerated and straight-line. This level of detail provides bullet-proof protection in the event of an IRS audit.
About Frank Giudici
Frank Giudici is a native New Englander who graduated in 2004 from a top-ranked engineering school in Massachusetts as a civil engineer. He started his professional career in the Construction Management industry, which exposed him to the designing, procuring, scheduling, and building of CRE across the country ranging from high-rise apartments to office buildings to semi-conductor facilities. After 14-years in the Construction Management industry, Frank turned his sights to the world of Cost Segregation…a fluke move that could not have resulted in a better fit. He is now the Northeast Business Development Director for one of, if not THE, largest independently-owned Cost Segregation provider in the country and loves the value-add insight he provides to clients on a daily basis!
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