Machinery & Equipment Appraisals

Cost Segregation Studies

The scope of work for this type of an assignment varies based on the usage or building type of the subject property and the age of the improvements. My professional background prior to being an accredited appraiser always involved construction cost estimating. The years while I was employed at engineering design firms, part of my duties was to provide cost estimates. Whether the cost estimate was for a proposed manufacturing facility re-tooling construction project or during construction for the contractors’ progress payments on a water treatment plant.

ACRS depreciation cost studyis to identify and differentiate(segregate) the property qualifying for accelerated depreciation as Section 1245 from the Section 1250 property and estimate the costs of the property into the appropriate federal tax life classifications. For an existing structure, the cost estimating method used in the analysis would be a Detailed Engineering Cost Estimate Approach. A field survey of the building components will beestimated by physical measurement and actual count. For a cross check, take-off quantities can be obtained from architectural as-built drawings designed by the building architect/engineers.

Costs estimates for the building and site improvements will be developed utilizing R.S. Means Square Foot Costs guide as the primary source. Costs for specialized items will be verified with local suppliersand contractors. Replacement costs for the improvements are broken down by their sub-assemblies that can be separated into the appropriate asset classification.

Internal Revenue ACRS cost segregation studiesare complex and require several pieces of information and documentation. Certified real estate appraisals and a registered land survey are sometimes performed for the salestransaction. Cost estimates have other uses. Such as; depreciated replacement costs on special purpose buildings to determine market value for insured policy limits and real property tax assessment. Please contact John Marcus at 602 214-3133 to get a full proposal outlining the scope of your project.