Accounting firm Friedman, Cohen, Taubman & Co. LLC has hooked up with Engineered Tax Services to provide cost segregation services to clients who own or invest in commercial and residential rental properties.
West Palm Beach, Fla.-based ETS specializes in cost segregation, which allows real property to be reclassified into personal property. The reclassification, which is typically for between 25 to 35 percent of the cost of a building, provides accelerated depreciation. For qualifying properties, cost segregation can also offer tax deferrals and even property insurance deductions.
ETS recently completed a cost segregation study for a large business park near Seattle in which it was able to reclassify over 28 percent of the real property, resulting in nearly $2 million in taxable benefits.
The cost segregation service provides a detailed engineered review of all a property's assets, including a review of mechanical and electrical systems. It leverages a method that the IRS approved in 1997 for reclassifying tangible personal property from real property and accelerating the depreciation of investment real estate property.
Andrew S. Taubman, managing partner of FCT, said his firm began working with ETS over a year ago on cost segregation services, but that he wanted to formalize the relationship. He has several clients that could use the service, including shopping centers, golf courses and large apartment complexes.
