Cost Segregation: Anything to watch out for?

[Torrey Benson]

Hi All! We are about to pull the trigger on a cost segregation study on our commercial building. I feel like we have done our due diligence...

-Vetted a reputable firm. 

-We qualify for RE professional status and meet the 500-hour requirement.

-The estimates work with our 2020 tax picture and review with accountant.

But before I sign their contract I wanted to reach out to the community and see if you have any tips on things to watch out for in this process. Anyone have stories I may be able to learn from before we go for it?

Thanks! Torrey

[Courtney Duong]

Originally posted by @Yonah Weiss:

@Courtney Duong you have a good question, and this is a bit of a complex topic. What you need to know is that there are two separate qualifications, 1) in order to qualify as REPS you must be participating in a real property trade or business. 2) You need 750 hours of "material participation" in rental properties. 

In your case, even though you work as a PM, you need  to own at least 5% of the company in order to qualify as ownership, and use those hours towards material participation. Without knowing any more details about your specific situation, and any properties that you may own, I can't really comment as to whether or not you can qualify.

@Yonah Weiss. Thanks for the response. We own and self manage 1 retail strip (9 units) and 10 SFH as of now (and still buying) so I am busy all the time working on acquiring and managing those. So I qualify for #1 and #2 you mentioned above, but then not meeting the 5% ownership of the company.