Frequently Asked Questions

---

Cost segregation is a tax-saving strategy that allows property owners to accelerate depreciation on components of a building. This leads to larger upfront tax deductions, improving cash flow. Typically, buildings are depreciated over 27.5 to 39 years, but with cost segregation, certain elements like fixtures, landscaping, or flooring can be depreciated over 5, 7, or 15 years. 

Cost segregation helps property owners accelerate depreciation, leading to larger tax deductions earlier in a property’s life. This can significantly improve cash flow, providing additional funds for reinvestment or operational costs. It's particularly beneficial for reducing tax liability on newly acquired or constructed properties, but it can also help existing properties through catch-up adjustments. 

Any income-generating property can benefit from cost segregation. This includes residential rental properties, commercial buildings, office spaces, industrial facilities, retail stores, and even specialized properties like car washes, gas stations, self-storage, or RV Parks. Essentially, if your property is used for business and incurs depreciation, it qualifies. 

No, a properly conducted cost segregation study should not increase your chances of an IRS audit. The IRS supports accelerated depreciation when it's performed in compliance with their guidelines. Using a qualified provider with detailed engineering documentation ensures your study will hold up to scrutiny. 

Cost segregation can complement a 1031 exchange by allowing you to maximize depreciation on the replacement property. After the exchange, a cost segregation study can accelerate depreciation deductions, helping offset any taxable income, thereby optimizing tax deferral benefits. 

A Cost Segregation Study must classify property components (e.g., personal property, land improvements) with proper cost allocation and depreciation schedules. It should be prepared by a professional using reliable data, follow IRS guidelines, and be defensible in case of an audit. The study should be filed promptly or retroactively by using Form 3115.

The full IRS Guidelines can be found by clicking HERE

Yes, a cost segregation study can be done on properties that have been in service for years. Through a "catch-up" depreciation adjustment (Section 481(a)), you can claim deductions for missed depreciation without needing to amend past returns. This allows property owners to take advantage of past and future tax savings. 

At SegPro Solutions, LLC., we combine expert engineering and tax knowledge to maximize your savings through cost segregation. Our team provides personalized service, ensuring a compliant and thorough analysis that aligns with IRS standards. We aim to boost your cash flow while minimizing audit risks, giving you peace of mind as you improve your financial standing.