Cost segregation is a tax strategy that allows taxpayers to accelerate the depreciation of certain assets in their commercial or residential rental properties³⁵. By identifying and reclassifying assets that have shorter depreciable lives, such as carpeting, furniture, fixtures, and equipment, taxpayers can reduce their taxable income and increase their cash flow¹³.
An engineering-based cost segregation study is a set of calculations created by an independent firm with extensive tax and construction knowledge that follows the IRS-approved method for cost segregation³⁴⁵.
An engineering-based study involves reviewing actual cost records and construction documents, conducting a site visit to analyze the property's components, and applying the appropriate tax rules and court cases to determine the asset classifications and depreciation schedules⁴⁵. An engineering-based study provides the most accurate and defensible results for cost segregation⁴.
(1) Cost Segregation Study for Commercial Property | CSSI ® - Cost .... https://costsegregationservices.com/cost-segregation-study/. (2) Cost Segregation Studies | M&E Cost Segregation. https://costsegleader.com/cost-segregation-studies/. (3) Updated IRS audit guide helps taxpayers improve cost segregation studies. https://www.plantemoran.com/explore-our-thinking/insight/2023/01/updated-irs-audit-guide-helps-taxpayers-improve-cost-segregation-studies. (4) Cost Segregation Methods Are Not Created Equal. https://costsegregationservices.com/cost-segregation-methods-are-not-created-equal/. (5) Cost Segregation Studies FAQs - Moss Adams. https://www.mossadams.com/articles/2021/08/cost-segregation-faqs.