Paradigm Partners performs Cost Segregation and Energy Efficiency studies:

• Cost Segregation Studies
• Energy Efficiency Studies

Cost Segregation Studies

What is Cost Segregation?

Cost Segregation is an engineering-based analysis of the components of a commercial property with the goal of identifying and segregating personal property from real property. The reclassification to personal property assets results in shorter depreciation lives for those assets and the tax benefits of accelerated depreciation and reduced tax liabilities.

Which Commercial Properties Qualify?

Here is a list of property types that qualify:

• Assisted Living
• Apartment Buildings
• Automobile Dealerships
• Bank/Financial Institution
• Fitness/Health Clubs
• Golf/Resorts Heavy
• Manufacturing/Processing
• Hospital/Medical Office Buildings
• Hotels and Motels
• Light Manufacturing
• Office Buildings
• Restaurants (single or multiple)
• Self Storage Facilities
• Strip or Regional Malls
• Tenant Improvements Warehouses

Candidates for Cost Segregation include the following:

• New Construction
• Look Back
• New Acquisition (Purchase Price Allocations)
• Leasehold Improvements

Commercial property that is valued at a minimum of $1,500,000 (excluding land value) or a commercial property with leasehold improvements greater than $750,000 have enough potential benefits to warrant a study.

What are the Benefits?

• Time Value of Money
• Dramatic reduction in taxable income
• Increased cash flow for investment opportunities and business expansion
• Property tax savings
• Insurance savings

Sample Case Studies

For more information, use our contact us form or call Karim Solanji at 281-558-7100.

Energy Efficiency Studies

Green Building Energy Efficiency Tax Deductions (Section 179D)

The Energy Policy Act of 2005 added section 179D to the Internal Revenue Code. Section 179D permits a deduction for the costs of installing certain energy efficient building systems in commercial buildings.

To claim the deduction, a taxpayer must obtain a certification of energy savings. The certification process must be performed by a qualified firm or individual that performed an on-site inspection of the building. The energy savings must be calculated using qualified software from the Treasury Department’s list of certified software programs. Paradigm's staff includes engineers that are qualified and certified to perform Green Building studies.

Green Building 179D Energy Efficiency Tax Deductions 

A tax deduction of up to $1.80 per square foot is available for improving the energy efficiency of existing commercial buildings or designing high efficiency into new buildings. Investments that appreciably reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings are eligible for a tax deduction. 

Overview of Paradigm's Green Building Study Process

• Review specifications and determine if building qualifies
• Site visit
• Certified engineer performs the energy modeling and analysis
• The study is completed and turned over to the building owner and their financial advisor 

Audit Support 

As with many tax incentives, there is a chance for an IRS audit. In the event of an audit, our fees for a study includes 40 hours of audit support. Paradigm feels comfortable in providing audit support because our engineers are experienced and follow all the rules and regulations as required by the IRS. In addition we feel our studies will withstand IRS scrutiny because we follow the methodologies recommended by the IRS. 

The Next Step 

If you are a building owner or a CPA firm with clients that you think might qualify, let our certified engineering professionals help you determine if you can take advantage of this great tax incentive and if so, maximize your deductions.

Green Building Energy Efficiency Tax Deductions (Section 179D) - Frequently Asked Questions (FAQ)

For an FAQ document on Section 179D, click here.

For more information, use our contact us form or call Karim Solanji at 281-558-7100.