Gregg Young has been named managing director of the Atlanta group. Young, who has nearly a decade of experience in separating costs between personal and real property, will be adding other specialists to the local team.
"In this market, everybody is looking at their bottom line, and this is one way [for CRE investors] to enhance that," Young tells GlobeSt.com. He notes that cost-segregation studies can be applied to existing buildings as well as those in design or construction phases.
Los Angeles-based CBRE has been involved in cost segregation over the past two years since acquiring Marshall & Stevens. It has several offices covering regions of the US, and will be able to increase its presence in the Southeast from its largest metropolitan area, Young says.
The Cost Segregation Group performs non-intrusive engineering studies of a building's structure, utilities and telecommunications lines to identify specific components that qualify for accelerated depreciation. Those time frames can be reduced to five, seven and 15 years, rather than 27.5 years for multifamily buildings or 39 years for other commercial buildings, according to CBRE.
Cost-segregation studies are based on well-founded interpretations of the Internal Revenue Code, plus applicable court cases and rulings. The studies are especially beneficial to building owners who have made substantial improvements and want to recover those costs more quickly.
While it is too early to determine how cost segregation will help against proposed higher taxes on capital gains, Young points out that it may allow CRE owners to take current deductions from buildings in order to invest in other properties. CBRE claims that its Cost Segregation Group analyzed more than 70 million square feet with a tax basis of at least $60 billion last year, creating more than $250 million in tax savings for clients.
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