How can REIT’s benefit from cost segregation studies?

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T a x R e d u c t i o n E x p e r t s
HOW CAN REITS BENEFIT From cost segregation
studies?
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INVESTORS!
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Cost segregation REIT's Federal tax
savings REITs can bene?t from cost segregation
studies Misconceptions have left many REIT's
believe their organisations are not
eligible Equity REITs most commonly realize
substantial bene?ts with a cost segregation study
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02 Cost segregation minimizes ordinary income to
maximize return of capital and/or capital gain
related distributions It creates ?exibility to
achieve various dividend objectives
A cost segregation study can decrease a REITs
operating income, allowing the REIT to distribute
additional income as tax-free return on capital
to high tax bracket shareholders or retain
additional cash for investment opportunities
COST
SEGREGATION
AT A GLANCE
A CSS can provide immediate reduction in ordinary
income through increased depreciation in
exchange for more Section 1231 capital gains in
the future.
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DEPRECIATION STRATEGY IS KEY TO DIVIDEND RESULTS
If a higher tax bracket shareholder is targeted,
a cost segregation study enables a REIT to
maximize return on capital. This minimizes the
e?ective tax rate to the investor/shareholder.
Relationships between dividend payout
distributions across ordinary income versus
capital gains versus return on capital are key
for maximizing dividend yield and are often key
in the growth of speci?c targeted investor
groups.
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HOW DOES O'CONNOR
WORK WITH REITS?
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• We begin our analysis by determining the
  strategic role
• as well as ?nancial objectives, operating
  policies and experience of each of the three
  groups of funds
• Private funds
• Funds registered with the SEC but not traded, and
• Funds publicly traded
• We evaluate the REITs philosophy regarding
  growth via acquisition of new portfolios versus
  growth via
• property or portfolio appreciation and the
  resulting gains.
• A REIT which has recently privatized or is
  positioning to
• do so is an excellent candidate for IRS cost
  segregation. We analyze a portfolio in advance of
  it becoming a REIT.

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OConnor Associates
Our CS specialists
We project turnaround
Our goal is to be upfront,
is the industry leader in look back studies
having done more studies bene?ting from Section
481a than any other boutique ?rm in the nation
combine the right balance of tax, accounting,
valuation and real estate expertise without
over-engineering what the IRS requires
is 4-6 weeks. Under special circumstances, it
can be as short as 10 business days!
honest and handle our client relationships with
the utmost integrity
HOW DO WE DIFFER?
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T H A N K Y O U
www.expertcostseg.com