INTEGRATING COST SEGREGATION INTO DESIGN/BUILD STAGE

Picture the tax savings in your blueprints.

In today’s market, multi-family and commercial real estate developers are facing construction delays, increased material costs, and a host of economic uncertainties. Now, more than ever, real estate investors need to adapt and employ new strategies to manage and free up cash flow for growth, debt reduction, distribution to owners, and operational uses.

Value engineering is a strategy that allows developers to create better long-term value for their investment in design, contracting, and final build-out. While most savvy developers recognize this approach, many lucrative opportunities are still overlooked. Simply put, they don’t know what they don’t know.

That’s why at Meridian, we don’t charge additional fees for construction consultation services – it’s another added value of choosing Meridian as your cost segregation provider. We believe performing our work in conjunction with the design build team is integral to all new construction projects. Our only variable is the project timeline and building requirements, enabling us to integrate these benefits into your project.

Construction tax planning extends beyond external tax solutions to improve the present value of post-tax cash flow to key stakeholders.

By combining the expertise of Meridian’s cost segregation engineers and sustainability team with the knowledge of your design build team, you incorporate cost segregation, energy incentives, credits and rebates with value-engineering, securing long-term tax benefits and cost-savings.

Finding value

The following are a few examples of how our cost segregation team realized unforeseen value:

• We advised a hotel client to create a modular design for an interior fountain. Our input allowed the $350,000 fountain to become fully deductible in year one, rather than over 39 years.
• While renovating a theater, Meridian advised our client on the construction of the underlying support system for the stadium seating. With our guidance, an additional $745,000 of fully deductible personal property was realized, instead of being classified as structural 39 year property.
• We recommended a client with storage facilities across the Midwest design multiple properties with interior demountability instead of interior walls, creating millions of dollars in tax write-offs.

More opportunities

There is often significant opportunity in how the buildout integrates with the shell. Additional opportunities arise with the construction of amenities in multi-family properties or parking garages in certain properties.

Other low hanging fruit in retail, hospitality, office buildings, and multi-family properties concerns flooring. Carpets and floating floors like vinyl plank are treated as personal property, while permanently adhered floors such as tile and glued-down wood, are considered permanent.

Tax incentives for energy efficiency

Additionally, federal, state, and local incentives for energy efficient construction are constantly changing. We present clients who are building or remodeling facilities with additional ways to increase the energy efficiency of their property and qualify for additional tax deductions and credits.
In our experience, simple modifications to ductwork, electrical, insulation or fixtures can save clients millions of dollars. There are multiple considerations the construction team will weigh, such as material cost, construction cost, aesthetic, reduction to energy costs, and overall tax savings. Our recommendations are not always a fit, but with no initial fee and a minimal time investment, why not find out if our pre-construction consultation services work for you?

If you are in the early design build stage of a new construction project and have not finalized the building plans, now is the time to reach out to Meridian.

How it works:

1. First, let your design build team know you are having a cost segregation study done as early as possible. We will work with the contractor to educate them on the cost information needed to perform an efficient and effective Cost Segregation study.

2. Next, our engineering team will review the conceptual drawings with the architect, discuss design ideas, and introduce alternative applications that could have a profound impact on the project’s bottom line.

3. We then work with the team to evaluate the cost benefit of our recommendations and conduct a final review of the plans. Our minimal interaction time should not delay your project timeline, however, the benefit of our early engagement can equate to tremendous tax savings.

Get Started

Meridian’s proactive approach allows our experts to identify potential tax savings, incentives and strategies in the design build stage of your construction project for an improved documentation trail and Value Engineering opportunities.
Contact us to learn why this is the ideal time to design tax savings into your architecture.