Cost Segregation FAQs

Your Cost Segregation questions, answered.

Frequently Asked Questions for
Cost Segregation

What if my commercial property business is audited by the IRS - Will Source Advisors be available to help me?

Yes. At Source Advisors, we stand behind our Cost Segregation services. Our team provides unparalleled studies that result in meticulous attention to detail identifying construction-related costs.

How long does a Cost Segregation study take to complete?

A study typically takes 30-45 days to complete. The Source Advisors team will keep you up to date throughout the process and answer any questions you have regarding the services being conducted.

Learn More:  How Cost Segregation Studies work

What information do I need to provide Source Advisors for an estimate?

The more detailed information you can provide, the better. This ensures a more accurate estimate, and we might ask for additional information to clarify our understanding of your particular project and needs.

At minimum, we need:

  • Capitalized costs for your project
  • Years that it was capitalized in
  • Depreciation schedule, if available
  • Brief description of your business
  • Number of floors, square footage of the building site
  • Property address
How much does a Cost Segregation study cost?

The IRS specifies the cost of a study should be based on the time required to perform the study; not a percentage of the projected or realized savings. The time involved in a study is driven by multiple factors.

Here are just a few aspects of the project that will impact the time involved to perform the study:

  • How big is the building?
  • What is the business activity in the building?
  • How many tax years will be analyzed?

Learn More: Cost Segregation Study Examples

What is Cost Segregation in real estate?

In real estate, Cost Segregation is a tax benefit strategy that is recognized by the IRS. It involves identifying specific components within a building or improvement project that can be classified differently for federal tax purposes—either as personal property or as land improvements, rather than as real property. This reclassification allows for accelerated depreciation schedules.

For example, the costs related to personal property components can be depreciated over a 5- or 7-year period, and land improvements can be depreciated over a 15-year period. This is faster than the standard 39-year or 27.5-year depreciation schedules typically applied to real property, thus providing potential tax advantages.

Cost Segregation Insights