Cost Segregation Studies

COST ESTIMATING SERVICES

Cost Estimating Capabilities

Nelson Engineering provides cost estimating services spanning the full spectrum of estimate classes. For design projects, we develop estimates in MasterFormat and/or UNIFORMAT, ready for contract bid. On facility condition assessments, we generate rough order of magnitude (ROM) estimates to address deficient facility conditions. Our certified cost estimators (CPE) ensure our estimates comply with American Association of Cost Engineering (AACE), ASTM E2516-11 Standard for Cost Estimate Classification System, and the American Society of Professional Estimators (ASPE) guidance. Cost estimating is an important component of Cost Segregation Studies. (read more)

By The Numbers

Since 2003, we have performed over 500 Cost Segregation Studies in over 40 states for a wide variety of end clients

Cost Segregation Studies

What is a Cost Segregation Study?

A Cost Segregation Study (CSS) is an in-depth study of new construction or existing property renovation. A CSS analyzes new or existing property and optimally classifies depreciable assets to generate cash flow tax savings. We identify assets eligible for accelerated depreciation so the property owner can realize faster recovery of capitalized costs and near-term tax savings.

Cost Segregation Studies identify, segregate, and reclassify project-related costs currently classified as real property to shorter depreciable tax lives. We are experts in understanding IRS rulings and procedures that allow taxpayers to change accounting methods and take advantage of these previously understated depreciation expenses back to 1987 without amending tax returns.

Primary Benefits of a Cost Segregation Study

  • Increased current cash flow through accelerated tax depreciation
  • Permanent net present value savings on tax depreciation
  • Independent third-party analysis withstands IRS scrutiny

    Since 2003 NE continues to provide clients engineering based cost segregation study (CSS) services. We have professionally signed and sealed over 1,600 segregation and tax service-related reports while segregating over $7.8 billion in assets. We have performed CSS’s on almost every type of commercial, institutional, and industrial property in over 40 states. Segregated property costs range from $500K to $632M. The IRS Audit Techniques Guide highlights two primary CSS approaches (both engineering based) the detailed cost approach and the cost estimate approach. Our engineering reports use both IRS recommended approaches. NE generated reports accurately document the clients depreciable tax position in a layered report format. Report sections include detailed cost schedules with accurate cost and tax references, in-depth narrative sections describing the projects purpose and scope, theory and definitions, our approach and procedures, terms and definitions, our conclusions and recommendations and a comprehensive photograph file from our site assessment. This layered approach checks all the IRS boxes for a sound report methodology and greatly reduces audit risk.

    Please feel free to contact me, Tom James, for any cost segregation or engineering-based tax services questions. I can provide a project’s net present (NPV) value and return on investment (ROI) calculations for any property free of charge. NE’s fees, presented with the NPV and ROI, are firm, fixed price, regardless of study outcome.

    Tom James, CPE

    Program Manager of Cost Segregation Studies

    PROJECTS

    Emergency Care Facility

    2018 New Construction Emergency Care Facility

    Great CSS candidate with favorable results. Identified property qualifying for accelerated depreciation included all mechanical, electrical, and plumbing systems supporting specialized treatment systems and rooms.

    CSS Results for Emergency Care Facility
    Luxury Hotel

    2019 Luxury Hotel

    Acquired Luxury Hotel containing two restaurants, two bars, multiple conference rooms, a spa and 216 guest rooms. The 143,173 gross square feet building was constructed in 2008.

    CSS Results for Luxry Hotel
    vanderbuilt-national-park

    National Park Service Project Scoping Assessments (PSA)

    PSA condition assessments include NPS Class B and C construction estimates. In 2019, we completed 29 PSAs for 14 NPS sites in the Southeast, Northeast and National Capital Regions.

    Converter Compressor Plant

    NASA KSC Nitrogen and Helium Converter Compressor Facility

    Design renovations include construction bid tender cost estimates. Facility upgrades support the Space Launch System (SLS) Program and commercial spaceflight clients throughout the Cape Canaveral Spaceport.