Establish credibility by demonstrating cost segregation tax law and engineering expertise—then show them the money!
In our experience, CPA firms are often strong contenders for cost segregation projects, primarily because they already have strong relationships with their existing clients and typically are not in a competitive bid situation. Even when pitching to a non-client, most accounting firms have a leg up over boutique cost segregation providers because CPAs typically are known in their markets for both integrity and tax know-how. However, general tax knowledge and trustworthiness usually are not enough to convince savvy commercial real estate owners to sign on the dotted line.
To win a seat at the table and get a chance to quote on a cost segregation project for a client or prospect, you need to demonstrate three important things:
- Understanding of the relevant tax code and case law.
- Engineering experience and industry expertise.
Again, the backing of an established cost segregation strategic partner is the best route to give your client or prospect confidence that you will deliver the full package of tax minimization and IRS audit defense.
- “Show me the money.”
When it comes down to it, commercial property owners are most interested in knowing how much they can expect to save on their taxes in the next few years. In general, we find that tax-paying owners of commercial buildings with a tax basis of $1 million or more see accelerated depreciation deductions that add up to at least 10 times the cost of the study. With just a few pieces of data, a reputable and established cost segregation firm can provide a detailed estimate of anticipated tax benefits.
Preparing a Cost Segregation Quote
Once you have clearly demonstrated your firm’s credentials, you are ready to prepare a quote for the project. Different CPA firms take different approaches. Some provide an estimate of their time on top of the cost seg specialist’s fee, and others give the client a package quote that allows them to value bill for their role in delivering the cost segregation study. (Remember that the only pricing strategy that is completely off the table is a contingent fee.)
For most CPAs, however, the true pot of gold at the end of the rainbow is the ability to keep competitors at bay and delight an important client with accelerated deductions that improve the owner’s cash flow.
Do you have a commercial real estate client or prospect who could benefit from a cost segregation study? Download our cost segregation data collection form, and we’ll give you a call to walk you through it and discuss how we can help you close on that opportunity and (most importantly) deliver valuable tax benefits to that building owner.