Do these studies raise red flags with the IRS?
Engineering-based cost segregation studies to classify depreciation are an accepted standard approved by the IRS.
Am I out of luck because the building was constructed or acquired in prior years?
Special provisions enacted by the IRS allow you to "catch-up" on any missed depreciation for any buildings built or acquired since 1987. No amended returns are required!
Will I owe taxes when I sell the building?
Not if you have an appropriate exit strategy such as a 1031 exchange! If you decide not to exchange, you will owe them anyway.
Why can't my CPA do this?
Most CPA's do not have an in-house engineer that can perform these studies. Our affiliate companies' staffs are comprised of engineers that are trained and experienced at reading blue prints, estimating values of building components, and knowledgeable of the pertinent tax laws. They fully understand construction materials, costs, and function. With this knowledge and experience, they work with your CPA to get you the tax savings you deserve.
We will get the deduction in the future anyway, correct?
Yes this is true, but a cost segregation study in effect gives you an interest free loan from the government for the first 15 years, which you will then repay interest free over the remaining 25 years. Who do you want holding your money? There are also advantages to doing a study if the building is going to be sold or upon the death of a building owner.
FREQUENTLY ASKED QUESTIONS
