Cost Segregation Frequently Asked Questions

Is there a minimum building construction or acquisition cost required for a 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 a Cost Segregation Study take to complete?

It typically takes about 10 weeks to complete a detailed engineering-based cost segregation study.

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 of accounting method (Form 3115) to be filed in the year of study.

If I don’t have architectural blueprints, 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.