When you’re dealing with taxes, you want to do everything exactly by the book. So, when you’re implementing accelerated depreciation of your assets, you want to be sure your cost segregation study is done correctly. We’re here to help you get the tax savings you deserve and keep them by helping you choose a cost segregation firm that’s going to do everything right.
Accuracy
Before you choose a firm, research cost segregation studies, and be prepared to ask the firm some questions. We’ve mapped out some things you should ask and be aware of before you decide to hire a firm to conduct this analysis. After all, it is your money; you should be able to take what’s yours and not have to return it because the analysis wasn’t conducted correctly.
Compliance
As you know, U.S. tax code dictates the rules you must follow. Because cost segregation is part of the tax code, there are suggested methods you need to follow if you are to conduct this type of analysis. You need to be sure that the cost segregation firm stays in compliance with all rules specified by U.S. tax code. Why should you be penalized for this third-party firm not following all the rules?
Specialization
You wouldn’t go to a doctor that didn’t know everything there is to know about your ailment; you would likely choose a specialist. So why should the cost segregation firm you hire be any different? You want to go to the firm that eats, breathes, and sleeps everything taxes. They need to know tax codes inside and out, and have researched past court cases on these related topics. Do your research and ask the questions so you can pick the firm that is the most knowledgeable about cost segregation analysis.
Peace of Mind
Finally, when choosing a cost segregation firm, be sure to do your homework. When it comes to your tax savings, this is especially important. You want to go with a firm that has in-depth tax knowledge and a substantial amount of rave reviews from past clients. You want to choose the firm that will defend their study in the event of an audit.
The best advice we can give you when choosing a cost segregation firm is to ask the questions, get answers and get your money back.
For more information, call me today at 770-224-8504, or email me at David.Wiener@cashflowstrategies.us.
Most of us like to spend as little time as possible with our CPA. Our once a year meeting is plenty and we try to keep it as short as possible. Who really likes to talk about how much money the government is going to take from us this year?
Proactive or Reactive?
Your choice of CPA can have a huge financial impact, and I’m not speaking of the fees that your CPA charges you for doing your taxes each year. Many CPAs operate reactively, simply accepting the documentation you send to them and preparing your taxes. But by the time you have put together your receipts, donations, W2s, and 1099s together for the year, you have likely missed out on many great ways to minimize your tax liability and preserve your wealth. You need to check your attitude toward working with your CPA, and both of you must take a proactive approach to your strategy.
The effectiveness of any CPA depends immensely on approach, timing and expertise when it comes to your taxes. It is vital for you to know what to look for when you are choosing a CPA. Failure to carefully choose will cause you to overpay your taxes, sometimes by a massive amount. The optimal CPA, using the correct resources, can potentially save you tens or hundreds of thousands of dollars or more.
Finding a CPA
When you look for a CPA, here is what you need to look for. The best CPA for you and your business will:
Be in regular contact with you regarding your standings and developments.
Consistently review your tax liability and manage it the best way possible within the tax code.
Have trusted advisors that can handle niche tax benefits and beyond.
Have a full knowledge of the IRS and be able to best represent you to them in case of an audit.
Be proactive in his or her approach, looking at all areas of your business to determine the best way to avoid unnecessary tax burdens.
For example, let’s say that you did your own accounting for last year and end up paying $25,000 in federal and state income taxes. If you had a CPA who simply accepts your information at the end of the year and files your taxes, he might charge you $1,000 and bring your tax liability down to about $22,000. Good deal, right? Hold on … maybe not such a good deal.
The US Tax Code
The good news and the bad news are the same. Our tax system in the United States is immense. It is almost 75,000 pages and growing all the time. As a result, there are thousands of intricacies, exceptions, rules and loopholes. It is far more than the average person could ever fully understand, and they are constantly in motion.
My Best Example
My dad was a CPA, and he always told me that “in order to be a CPA in today’s world, you need to be ‘ten miles wide and a foot deep’. What he meant was, you need to know a little bit about a lot of things, and you need to know people who understand, and can help you with, the things you don’t fully understand. He had a group of trusted advisors that could help him, and his clients, do the things that he couldn’t do well, and he used them. My father was one of the best CPAs I have ever known. His style was was not only proactive; he was relentlessly proactive. He also always told me that “Tax evasion is a crime, but tax avoidance is mandatory.”
It’s Not About The Fee
Your CPAs level of dedication is the crucial element. A CPA cannot possibly understand and execute on the complexities of the tax code. Anyone can have a long list of clients, a beautiful office, and a great personality. The long and short of the matter is the amount of time and effort that your CPA is willing to invest in ensuring that your wealth is managed in the best possible way. The fees that are charged by CPAs vary widely. There are some cases where you get what you pay for, but that isn’t always true.
What Makes The Difference?
A great CPA will bring in those who specialize in things like cost segregation studies for their clients who own, or renovate, commercial or investment property, or to identify R&D tax credits, retraining or other innovative tax credits for which you may qualify. There are unique little-known tax strategies that cover all different markets, so to expect that your CPA will know how to use them for all industries is just not realistic. But if you have a CPA you know who is willing to utilize all the methods at his disposal, you can rest easy knowing that your wealth is in good hands.
With the help of a solid CPA you could, possibly, get that original $25,000 in taxes down to somewhere closer to $10,000 plus a few thousand or so to free yourself of the stress of managing your own taxes. THAT’Sa good deal!!
What you can do
If you don’t feel that your CPA is doing EVERYTHING possible to help you save on taxes, chances are very good that he or she is not. If someone is overseeing your finances, you should feel comfortable, informed, and confident in that relationship. Your taxes, your money, and your future is at stake.
I work with a large network of proactive CPAs across the United States. I am confident in the ways they deal with their clients and the taxes they pay. I’d be happy to introduce you to one or more of these great people to help you. Just give me a call or email me. I’m happy to help.
Many landlords, especially those who own smaller properties, are unaware of the tax benefits available to them. Here is something that your CPA may never tell you about.
Real estate investors have a simple alternative. Most will take the option of depreciating the initial value of their residential rental building in equal amounts over the allowable 27.5 years or their office building over 39 years. In a $200,000 rented house, you would write off $7.272 per year in depreciation. Many CPAs will recommend that you do your depreciation this way, the easiest way.
Straight line depreciation may be the easiest way for your CPA to apply your depreciation, but is it the most advantageous way for you and your cash flow? Depending on your circumstance? Perhaps not.
Cost segregation is an IRS-defined method of accelerating your depreciation and, while it may be more complicated, it need not be difficult for you or your tax professional. By using engineering-based cost segregation, your property depreciation is applied by depreciating all of its component parts, many of which may be depreciated fully in 5, 7 or 15 year increments. By depreciating this “short life” property more quickly, you would receive an increased tax deduction now rather than waiting for 27.5 or 30 years to take its value off of your tax bill. With the 2017 Tax Cuts and Jobs Act, that 5, 7 and 15 year property can all be depreciated the very first year. That is called “Bonus Depreciation”
In essence, you are getting an interest free loan on your taxes from the US Government. Think of it this way: If I was going to give you $100,000, would you rather have it all now, or in 27.5 annual installments. Getting it right away is a “no-brainer” because that money, if invested back into the business or smart investments, will yield far more money long-term than having me babysit your money for you for many years.
If you:
have property worth over $200,000,
intend to keep the property over 3 years, and
pay taxes
then I believe it would be in your best financial interest to, at least, investigate whether this is a good option for you. I will complete a no-cost, no-obligation analysis of your property and I will let you know if this strategy would be profitable for you. Your tax professional cannot, in most cases, provide you with the study necessary to maximize your depreciation. We will work with your CPA to make sure you get all the cash flow you are entitled to.
I can also advise you of some other tax strategies that may be beneficial to your cash flow and profitability. The 2014 IRS Repair Regulations, IRS Safe Harbors, and Building Systems Valuations may all be beneficial strategies to consider. I’ll help you navigate these strategies.
And don’t worry about the IRS. They have called this method of cost segregation the “certain method” of depreciation. We have completed over 20,000 studies in all 50 states, and have never triggered an audit. Should the IRS question your cost segregation during an audit, we will defend the study at no cost to you. We have never had a study rejected or changed.
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