How long does it take to complete a cost segregation study?

From the time all necessary documentation is received, it normally takes about 4 to 6 weeks.

What materials (as applicable) are needed to complete a cost segregation study?

  •         A full set of construction plans
  •         Final AIA application and/or other cost information
  •         Current tax depreciation records
  •         Building cost budget information
  •         Change orders
  •         Direct or indirect costs paid by the owner not included in other documents
  •         Other information depending on the project

What if I don’t have the necessary materials? Can a cost segregation study still be performed?

Yes. Our construction, engineering and other specialists can do an extensive site visit. They will measure and estimate using current accepted costing techniques and pricing guides to determine your costs that qualify for shorter recovery life periods.

Can I use my own engineers and architects?

From our experience, it is most beneficial and cost efficient to use engineers and architects who are familiar with and specialize in cost segregation work. They understand the components that qualify and know how to document and substantiate their work. Their work also better withstands IRS scrutiny and they are able to assist with any IRS challenges.

Can my current CPA do a cost segregation study for me? Can you work with my current CPA?

Not all CPAs are experienced in cost segregation work. If your CPA is not experienced in this area, we will gladly work with them on a consulting basis to complete the work for you. We currently have relationships established with several firms who call us to do this type of work for their clients without fear of us taking over the client relationship.

Do my chances of being audited increase once a cost segregation study is completed on my property?

It is difficult to know what might trigger an audit. In our experience, the chance of being audited does not substantially increase after a cost segregation study.

Will Henry+Horne be available to assist in the event of an audit?

Yes. Our specialists will be available to assist in the event you are audited. In doing the cost segregation study, our focus is to create documentation and support for our conclusions so that they are easily communicated and resolved with the IRS.

When items are classified as personal property in a cost segregation study, does that increase my personal property tax?

In general, a cost segregation study will not impact personal property classifications. The work done is for depreciation purposes only. The classification for depreciation purposes does not change how the property is classified under the personal property tax laws of the jurisdiction where the property is located. However, we would recommend a review of the applicable personal property statute.

More questions? Our tax professionals help clients in a variety of industries including construction, dealerships, restaurants, technology and more.