Cost SegregationCost Segregation

QualifyingQualifying

Target MarketTarget Market

Targeting the correct market leads to:Targeting the correct market leads to:- Efficient Time ManagementEfficient Time Management- Higher close ratesHigher close rates- Increased confidenceIncreased confidence

CSSI Target MarketCSSI Target Market

Commercial Property Owner/Leasee Commercial Property Owner/Leasee with Build Outwith Build Out- Very large and broadVery large and broad- Not all qualifyNot all qualify- Need to narrow focus to determine optimal Need to narrow focus to determine optimal

target markettarget market

Building QualificationBuilding Qualification

First StepFirst Step- Determine if the building meets the Determine if the building meets the

qualifications of your optimal target marketqualifications of your optimal target market

CSSI Target Market-BuildingCSSI Target Market-Building

IRS states Cost Segregation can be IRS states Cost Segregation can be applied to any property purchased or applied to any property purchased or remodeled since 1986remodeled since 1986- Buildings purchased/remodeled since 1986 Buildings purchased/remodeled since 1986

are nearly fully depreciatedare nearly fully depreciated- Properties purchased/remodeled more Properties purchased/remodeled more

recently (last 10-15 years) will receive recently (last 10-15 years) will receive higher benefitshigher benefits

CSSI Target Market-BuildingCSSI Target Market-Building

Cost Segregation can be applied to all Cost Segregation can be applied to all types of commercial propertiestypes of commercial properties- Unless you have a connection to larger, Unless you have a connection to larger,

“skyscraper” type properties, you probably “skyscraper” type properties, you probably will never speak with the ownerwill never speak with the owner• However, CSSI can and has completed studies However, CSSI can and has completed studies

on these type of propertieson these type of properties• Focus on smaller buildings ($10MM and under)Focus on smaller buildings ($10MM and under)

– More likely to connect with ownerMore likely to connect with owner

Cost BasisCost Basis- Needs to be at least $300,000Needs to be at least $300,000- Under $300,000Under $300,000

• May apply if multiple propertiesMay apply if multiple properties

CSSI Target Market-BuildingCSSI Target Market-Building

CSSI Target Market-BuildingCSSI Target Market-Building

Types of Commercial PropertiesTypes of Commercial Properties- Nearly all can benefit from cost Nearly all can benefit from cost

segregationsegregation- Certain types benefit more than othersCertain types benefit more than others

• Medical/Office/Apartment/Retail – high endMedical/Office/Apartment/Retail – high end• Bare Warehouse – low end Bare Warehouse – low end

Buildings that will not qualifyBuildings that will not qualify- Non commercial propertiesNon commercial properties- Not for profit propertiesNot for profit properties

• Charitable organizationsCharitable organizations

- Public propertiesPublic properties• State owned propertiesState owned properties

CSSI Target Market-BuildingCSSI Target Market-Building

Building Owner QualificationBuilding Owner Qualification

Second StepSecond Step- Determine if the building owner meets the Determine if the building owner meets the

qualifications of your optimal target marketqualifications of your optimal target market

CSSI Target Market-OwnerCSSI Target Market-Owner

All commercial property All commercial property owners/leasehold improvement owners owners/leasehold improvement owners can apply cost segregationcan apply cost segregation- True, but not all will benefitTrue, but not all will benefit- Owner needs to be generating incomeOwner needs to be generating income

• Paying taxesPaying taxes

CSSI Target Market-OwnerCSSI Target Market-Owner

Owners needs to hold propertyOwners needs to hold property- At least 5 years after applicationAt least 5 years after application- Cost Segregation accelerates depreciation, Cost Segregation accelerates depreciation,

it does not increase overall depreciation it does not increase overall depreciation expenseexpense

- Based on time value of moneyBased on time value of money• Need time for the savings to growNeed time for the savings to grow

Locating Target MarketLocating Target Market Start with personal relationshipsStart with personal relationships

- Trust is already establishedTrust is already established Visit businesses near youVisit businesses near you Third party marketsThird party markets

- CPA, Real Estate Broker, BankerCPA, Real Estate Broker, Banker ConventionsConventions

- Held for nearly every type of businessHeld for nearly every type of business• Ex. Hotel Owners ConventionEx. Hotel Owners Convention

Tax Assessor Tax Assessor