Question 1

What is a cost segregation study?

Accepted Answer

A cost segregation study is an IRS-approved engineering analysis that identifies components within a commercial or investment property and reclassifies them from 39-year straight-line depreciation into 5, 7, or 15-year accelerated classes. This generates significantly larger tax deductions in the early years of ownership, improving cash flow through deferred taxes.

Question 2

What types of properties qualify?

Accepted Answer

Almost any depreciable real property with a basis above $500,000 qualifies. The most common candidates are commercial office and retail, industrial and warehouse, medical and dental offices, restaurants and hospitality, multi-family apartment complexes, short-term rental properties, and new construction projects.

Question 3

How long does a study take?

Accepted Answer

A standard study runs 3 to 4 weeks from the date the engagement letter is signed and initial deposit received.

Question 4

Will this trigger an IRS audit?

Accepted Answer

A properly prepared, engineering-based cost segregation study does not increase audit risk — it reduces it. The IRS published a Cost Segregation Audit Techniques Guide that outlines exactly how a compliant study should be prepared, and we follow it precisely.

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