Question 1

What is the typical timeline for a cost segregation study?

Accepted Answer

The duration of a cost segregation study depends on the property's size and complexity, but it generally takes a few weeks to a couple of months. This includes everything from the initial consultation to the delivery of the final report. The timeline will be tailored to your specific property needs.

Question 2

Who should I hire for a cost segregation study?

Accepted Answer

When selecting a cost segregation provider, look for a firm with experienced ASCSP credentialed professionals. Their engineers and tax experts should specialize in cost segregation. Ensure they offer IRS-compliant reports and provide audit protection. The reports should be detailed and tailored to your property, not generic. Compare their pricing to the potential tax savings for a strong return on investment, and make sure they offer ongoing support and clear communication throughout the process.

Question 3

What types of assets can be reclassified through cost segregation?

Accepted Answer

Certain assets such as building components, land improvements, equipment, fixtures, and interior finishes can be reclassified. These are assets that generally have shorter depreciation schedules compared to the building itself, allowing for faster tax deductions.

Question 4

Does cost segregation increase the risk of an IRS audit?

Accepted Answer

When conducted by qualified professionals who follow IRS guidelines, cost segregation studies are recognized and accepted as legitimate tax planning strategies. Proper documentation and compliance can minimize audit risks while securing substantial tax savings.

Question 5

Can cost segregation studies be performed retroactively?

Accepted Answer

Yes, cost segregation studies can be performed retroactively. Property owners can apply these studies to properties that were placed in service in prior years. This process, known as a look-back study, allows you to capture depreciation deductions that may have been missed, which can result in significant tax savings. In many cases, this retroactive application can lead to catch-up depreciation adjustments, possibly generating tax refunds or reducing current tax liabilities.

UNITED TAX ADVISORS

Maximize Your Tax Savings Today!