Cost Segregation Study

[Jake Hughes]

Called my CPA and they mentioned that aside from tax write offs we can do a cost segregation study on one of my properties. What does this mean?

[Basit Siddiqi]

A cost segregation study looks at the overall building that you purchased and breaks it down as much as possible.
The purpose of this is to increase the depreciation expense.
Without a cost segregation study, you are depreciating the property over two items(Building and Land).
However, a cost segregation study might identify items such as fencing which might be eligible to be depreciated over 15 years instead of 27.5 years.

Depending on the year that the building was placed into service, you might be able to take bonus depreciation on certain items.

The follow-up question to ask your CPA is will the cost segregation study help me, and by how much?
There are instances where added depreciation expense will not result in a larger refund.