This document discusses cost segregation and how it can provide tax savings benefits for building owners. Cost segregation involves analyzing building components and identifying those that are eligible for accelerated depreciation, providing significant tax deductions. An engineering-based cost segregation study can increase deductions by $50,000 to $80,000 per $1 million in building basis. The document provides examples of tax savings from cost segregation studies of various property types, including apartments, offices, warehouses, and self-storage facilities. It encourages building owners to have a no-cost analysis done of their property to realize potential tax savings benefits.

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Bethesda Networking Trust
Jerry Lotz
February 21, 2018
Cost Segregation - TPR Implementation

2. CostSeg Energy Solutions
Copyright © 2018
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TAX SAVINGS SOLUTIONS
FOR BUILDING OWNERS/LESSEES
Increase Cash Flow and IRS Compliance
February 21, 2018
Jerry Lotz
Cost Segregation - TPR Implementation

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Who is CSSI?
Tax Savings…. Delivered….
• Performing Engineering-based Studies for over 15 years
• 16,000+ Studies completed across the U.S.
• CEO - Jim Shreve, has been involved in Cost Segregation since the
Original IRS court case in 1997
• Full Engineering-Based Studies completed in 6-8 weeks.
Disposition & Cost Segregation
Tangible Property Regulation/Repair Regulation Calculations
Capital to Expense Reversals
LED Lighting Retrofits and Tax Benefits Associated
Section 179D Energy Credit Analysis
Quality Improvement Property (QIP) Calculations
R&D Tax Credit Analysis
Cost Segregation - TPR Implementation

4. CostSeg Energy Solutions
Copyright © 2017
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FEDERAL Income Tax Deductions
• Personal - Mortgage Interest, Child Care, Medical, etc.
• Business - Depreciation, Payroll, Interest, etc...
• Both look to MAXIMIZE Deductions to Offset Income
Cost Segregation - TPR Implementation

5. How?
Cost Segregation = Cash Flow
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What is Cost Segregation?
• The process of analyzing and identifying residential rental/multi-family or
commercial building components that are eligible for accelerated depreciation,
providing a significant tax benefit for the taxpayer
• Engineering-based is defined as the “Certain Method” by the IRS
• Accelerating Depreciation increases expense deductions to offset the income
RESULT = TAX SAVINGS = CASH FLOW
• Client can use the cash today instead of leaving with the IRS for 27.5 or 39 years
Personal Property is Segregated from Real Property
$50k to $80k in Savings per $1 Million in Basis
Works on $250k+ buildings
Cost Segregation - TPR Implementation

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Cost Segregation - TPR Implementation
Explaining Cost Segregation
Straight-Line
• Hamburger
Cost Segregation
• 2 All Beef Patties
• Special Sauce
• Lettuce
• Cheese
• Pickles
• Onions on a
• Sesame Seed Bun
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7. Explaining Cost Segregation
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5 & 7 Year Property
 Decorative building elements,
wallpaper
 Specialty electrical, plumbing,
mechanical
 Carpet, flooring, crown
moldings,
 Built In cabinets, counter tops
 Security, special lighting,
window treatments
 Communications, cable
 Kitchen fixtures, refrigeration
equipment
15 Year Property
 Landscaping, paving, fencing,
site utilities, parking lot,
signage, sidewalks, sprinklers,
walkways
Cost Segregation vs Straight-Line Depreciation

8. Cost Segregation - TAX Cuts & Jobs Act
HUGE ADVANTAGE
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8 Cost Segregation - TPR Implementation
• 5yr., 7yr. and 15yr. property placed in-service
after Sept. 27, 2017 and for the NEXT five
years is allowed 100% BONUS DEPRECIATION!
• Roughly 15-25% of the total building asset is
NOW eligible for 100% bonus in year ONE
• New construction or old construction qualify
This is a GAMECHANGER!!!!!

9. . Any Building USA
Building Cost $ 2,200,000
2018 2022
Date Acquired: January 2017
Tax Year: 2017
Current Method
Accumulated Depreciation Reported
27.5 year straight line method $ 76,670 $ 156,662 $ 476,630
Alternative Method
Cost Segregation Study Accumulated Depreciation
5 yr. $ 74,800 $ 194,480 $ 374,000
15 yr. $ 7,700 $ 22,330 $ 67,612
27.5 yr. $ 58,269 $ 119,063 $ 362,239
Total $ 140,769 $ 335,873 $ 803,851
Results for Tax Year: 2017 2018 2022
Increased Accumulated Depreciation Expense $ 64,099 $ 179,211 $ 327,221
Tax Rate (Estimated) 39.6% 39.6% 39.6%
Estimated Accumulated Tax Savings Benefit $ 25,383 $ 70,968 $ 129,580

10. . Any Building USA

11. . Any Building USA

12. . Any Building USA
WHO Qualifies and WHO Benefits
• Owners and sometimes leaseholders of residential rental, multi-
family, and commercial property
• Properties newly bought, newly built, remodeled and even those
owned for a number of years
• Manufacturers, Food Processing Plants, Poultry Farms
• Warehouses, Residential Rentals, Apartments, Condos, Hotels
• Auto Dealers, Franchises, Restaurants, Supermarkets, Offices
• Retail Malls, Strip Centers, Medical/Dental Bldgs., Laboratories
• Nursing and Assisted Living Facilities, Hospitals, Funeral Homes
• Refineries, Self Storage locations, All Types of Buildings….

13. Stay Compliant Moving Forward
Building Systems Definition
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EXP/CAP TEST -
Client spends
$50,000 on HVAC
System.
TPR ratio test is
30-35%.
50,000/179,747 =
28%.
Test says to
expense. Train the
staff to do this for
these items at
time of
expenditure.
Cost Segregation - TPR Implementation
©2017

14. Case Studies -
Cost Segregation and Partial Disposition
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Climate Control $3,150,750
Self-Storage
Tax Savings Benefit: $ 164,682
Cost Segregation
Partial Disposition
Auto Dealership
Cost Segregation - TPR Implementation
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Cost Basis
Condo $324,000
Tax Savings Benefit: $ 30,609
Office Warehouse $5,246,900
Tax Savings Benefit: $ 312,687

15. Capital to Expense Reversal
Examples $$
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Apartment Complex
• Purchased in 1993
• Cost $1.1 million
• Improvements over years
– $4 million, $160k, $2.7million,
$70k, $26K, $900k
Resulted in Tax Savings of
$554,000
Office Building
Converted to Hotel
• Purchased in 2000
• Cost $1.6 million
• Multiple Improvements
– $10 million, $1.2 million, $41K,
$30K
Resulted in Tax Savings of
$1.1 Million
Office Building
• Purchased in 2007
• Cost $560,250
Resulted in Tax Savings of
$69,800
Self Storage
• Purchased in 2016
• Cost $2,460,000
Resulted in Tax Savings of
$44,654

16. It is Easy to Start!
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We will provide a No-Cost Analysis of
Your Commercial Property
Data Required
Client’s Depreciation Schedule
OR
– Type of Building
– Cost Basis
– Year and month acquired
– Improvement (Year and month + Cost)
CSSI will generate a no-cost analysis for you.
Cost Segregation - TPR Implementation

17. Let’s Get Started
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Jerry Lotz
Savings Advisor
CostSeg Energy Solutions
jlotz@CostSegES.com
410-878-2553
Cost Segregation - TPR Implementation
Let US Help Reduce Your Income Taxes!
www.CostSegES.com
Let Us Provide a No Cost Analysis for You!