Barbara Hayley, President, CEO Advanced Engineered Tax Strategies and Hayley Capital Gold Standard Cost Segregation Reports www.hayleycapital.com 1
Setting the Context for Engineered Taxes Cost Segregation is an engineering discipline that: • Compliments the area of accounting • Is required by law to be done by: • Qualified Engineers • Construction Experts • Trained Consultants • Most CPA’s/CFO’s have heard of cost segregation but by IRS rules should not be doing CS. They are not experts in the engineering side and may not keep up with current tax law. 2
Hayley Capital • HQ in Houston, Texas • Operates in all 50 states • Increases cash flow • Reduces income tax liability and money spent on energy costs • Maximizes commercial property performance with: • Advanced Engineered Tax Strategies • Gold Standard Engineering • Cost Segregation 3
Advantage We are a leading provider of engineered tax deductions. We analyze depreciation schedules to provide immediate tax benefits for our clients. We do this thru an IRS approved processes. We provide critical support function for our clients CPA’s. Our Services include but not limited to: Cost Segregation – accelerated depreciation Abandonment/Disposition Studies 179D-energy efficient tax deduction 45L-multi-family energy efficient tax credit (prior to 2018) Green Zip Drywall Construction Technique Predominant Utility Studies-sales tax exemption Modeling Software for <$500K Properties 4
What Makes Us Different Customized proprietary software and a streamlined process produces an audit defensible study, (built for an auditor, in case one is requested). Strong alliances with commercial builders, law firms, accounting firms, advanced tax wealth advisors, architects, commercial bankers and property owners 5
The New Face of Cost Segregation Identifying & Implementing Missed Opportunities for Real Estate Cost Segregation • Fully engineered study • Allows building owners to write off their building • (new, existing & leased) in the shortest amount of time permissible Brings depreciation forward as much as allowed • Time Value of $$$$ • Benefit can be carried forward for 20 years 6
How Does Cost Segregation Work? Reclassifies certain costs that were previously subject to 39- or 27.5-year depreciable life, now classified as personal property or land improvements with a 5, 7, or 15-year rate of depreciation, using accelerated depreciation methods.
Who is Eligible for Standard Cost Segregation • Must be ”For Profit” entity • Must have Tax Liability • Entity has Owned Property for less than 15 years [Actual building can be older]
Bonus Depreciation 2009-2010 50% bonus depreciation 2011-100% bonus depreciation 2012-2016-50% bonus depreciation 2018-2019 100% bonus depreciation for new and purchased assets “Barbara, you did an outstanding job on every detail of my building and rental home. Working with you demonstrates how much you care about what you do and how you are on top of everything every step of the way. I am so thankful for your expertise and hard work.“ Mildred Barrett, Don McGill Toyota, owner 9
2018 Tax Cuts & Jobs Act Massive Increase in Depreciation 100% Bonus Depreciation for NEW and EXISTING assets. Tenant Leasehold Improvements are ONLY subject to 100% bonus via cost segregation study 10
About Catch Up Studies • Property owners can go back and capture 15 years of Depreciation without amending returns for one or multiple properties? • ‘Fully engineered’ cost segregation studies can correct misclassified assets and "catch up" in the current year and increase the cash flow now! “Barbara, you and your team did an excellent job for my client. Your attention to detail, quick responsiveness and just overall professionalism on this difficult project was outstanding. You produced a great product and saved my client over $2 million dollars in taxes. We appreciate it very much.” James Bramlett, General Contractor, 11 Dallas, Texas HAYLEYCAPITAL.COM
Abandonment/Disposition • It takes engineering/construction expertise to properly configure the necessary components for abandon studies • Abandonment/Disposition for renovations on an asset • Complete and Protected Study built for Auditor • Accelerate the remaining depreciation for that disposed assets to increase the benefit • Engineering back up required by the IRS. HAYLEYCAPITAL.COM
Cost Segregation for Estate Planning • Heirs get a “step up” to fair market value of the property and get to depreciate the same personal property over again. • Create permanent tax deductions from a cost segregation study when someone dies. HAYLEYCAPITAL.COM
Cost Segregation Study for under $500K Assets Few Firms offer CSS for under $500K in (basis) costs • Purchases, Renovations, Improvements or Residential Rental • How many people have clients with a portfolio of rental homes? Estimate: $300K Basis Benefit $80,500 14
Actual HC Projects Project #1: Ground Up 12,000 SF Radiology Center, had been depreciating on tax return since 2011 (7-years) when we did CS Study in 2018. New Construction Costs Depreciated Taxes Reduced $2,408,446 $620,505 $248,202 Project #2: Ground Up 6,000 SF construction, women’s fertility clinic in New Braunsfels. Construction & study completed in 2017. Construction Costs Depreciated Tax Deduction $1,974,585 $829,325 $331,730 HAYLEYCAPITAL.COM
Actual HC Projects Project #3: (3 Locations included) Ground up Medical Spa & Rehab. 60,000 SF each with total of 360K SF and total costs of $36M all in Houston area. Total (3 locations) Costs Depreciated Taxes Reduced $36M $15,624,898 $6,249,959 HAYLEYCAPITAL.COM
Actual HC Projects Project #4: 7,000 SF of tenant improvement ER Center, Dallas. Construction completed 2018, study completed 2018. TI % Accelerated Depreciated Tax Reduction $1,775,530 95% $1,676,445 $670,057 HAYLEYCAPITAL.COM
Information Needed for Complimentary Analysis For our initial analysis we need: 1. Cost of building purchase or cost of construction (does that amount include the land value or not, if you have it) 2. Was this a purchase or ground up new construction 3. What date was the building placed in service/month/year or just year 4. What is the building used for 18
Research & Development (R&D) Research tax credits are a valuable source of support to businesses that conduct qualified R&D • Software merges proprietary software solutions • Unmatched engineering and tax expertise • Full coat of armor through the entire R&D Tax Credit process • American innovators increase asset base • Reduce their tax bill • Fuel the American economy. 19
Research & Development (R&D) Small and Mid-Size Companies • Manufacturing, Life Sciences, Biotech, Food Science, Bio- • Flavoring, Breweries/Distilleries, Aerospace, Industrial • Automation and Controls, Architectural Firms, Engineering • Design, Structural/Architectural Materials, Tool & Die Companies, • 20 Software & Web Development, Etc. •
Major changes for R&D 2016 Prior to 2016 – the R&D Tax Credit could not be taken against AMT . That’s all changed now. That means if you run a company and AMT has traditionally kept you from further reducing your tax liability, 2016 is your year. The PATH Act changes allows for pre- revenue “start - up” firms to offset their FICA tax liability with this R&D tax credit. 21
Green Zip Projects 40K SF Hospital: $12M 2 floors 40K SF $1.7M Benefit Rehab Center: $9,475,000 50,000 SF $1.3M benefit Eye Surgical Center, $3.4M 6K SF Tenant Improvement $550K Benefit 22
Green Zip LEED Certification Green Zip qualifies for 3 to 5.5 LEED Certifications CERTIFIED SILVER GOLD PLATINUM 40-49 Points 50-59 Points 60-79 Points 80 + Points 23
179D Energy Efficient-Installs Prior to 2018 Size of Partial Tax Deductions Full Tax Improvement Deduction Lights HVAC Envelope 50,000 sf $30k $30K $30K $90K 100,000 sf $60K $60K $60K $180K 300,000 sf $180K $180K $180K $540K 24
Our Loyal Houston Clients gk mechanical inc 25
Our Loyal Houston Clients Rayford Surgical Center, LLC Kingwood Emergency Hospital Douglas Pads & Sports Home of Olympian Simone Biles 26
How Can We Support You and Your Business? Enhance your relationships and loyalty • Value added to you and your client base • Expand and enhance your knowledge of Engineering Tax • Deductions Newer clients, bigger real estate, etc... • Expanding revenue with referral partnerships • 27
Complimentary Estimates Imagine if you can provide your clients with unexpected $2M in savings?
Thank You For Your Time and Attention! Let’s Make a Difference Together! Please Contact Barbara Hayley barbara@barbarahayley.com Cell: 832.698.9513 Please Contact Jake Collins jake@hayleycapital.com Cell: 646.812.6925 29
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