FAQ

Engineering-Based Cost Segregation Study FAQ

Is there a minimum building construction or acquisition cost required for an Engineering-Based Cost Segregation Study? What assurance is there that the NPV benefit will exceed the cost of this study?

There is no minimum building construction or acquisition cost required. However, cost of conducting the study begins to outweigh benefits when the depreciable tax basis to be segregated falls below $1,000,000 – $750,000 range.

How long does an Engineering-Based Cost Segregation Study take to complete? Do you conduct a site visit?

It typically takes about 10 – 12 weeks to complete a detailed engineering-based cost segregation study. We conduct a site assessment with every study that we conduct for verification and identifying additional qualifying components per the IRS Audit Technique Guide.

Does the IRS allow a Cost Segregation Study to be performed on buildings that were purchased or constructed and placed into service in a prior tax year?

Yes. A cost segregation study can be performed on any building that was placed into service as far back as 1987. “Catch-up” depreciation is recognized all in the first tax year affected by the study. This procedure requires an automatic application for change in accounting method (Form 3115) to be filed in the year of study.

If I don’t have architectural drawings, is cost segregation still possible?

Yes. Through our extensive site visit, we are able to conduct a cost segregation study without construction drawings/blueprints if necessary.