Frequently Asked Questions

Learn more about our process. 

What is Cost Segregation?

Cost Segregation is a process whereby personal property is identified and segregated for income tax purposes. It allows businesses to increase cash flow by accelerating depreciation on certain classes of personal property and deferring income tax on both the federal and state level. Specifically it reclassify’s assets from 39 or 27.5 years to 5,7 and 15 year classifications.

What Type of Property will Qualify for Cost Segregation?

  1. Any property placed into service on or after January 1st 1987.
  2. The property may be New Construction, Expanded, Renovated or Remodeled.

What information will be needed to perform the study?

  1. A current depreciation schedule for the property
  2. Construction Plans and specifications
  3. Building cost breakdown with change orders
  4. Entity Balance Sheet

Can I use my own Engineers?

Based on experience, it is most beneficial and cost effective for us to use specialists who are familiar with and specialize in Cost Segregation work. The have an in depth understanding of the components that qualify and know how to document and substantiate their work so that they are able to withstand IRS scrutiny and able to assist with IRS challenges.

What type of components will qualify for different depreciation schedules?

  1. Beams
  2. Columns
  3. Communication Systems
  4. Computer Data and power
  5. Electrical components ( some not all )
  6. Fencing
  7. Floor Coverings
  8. HVAC and Ventilation
  9. Exterior Lighting
  10. Landscaping
  11. Mill work
  12. Parking lots and Curbing
  13. Security Systems
  14. Signage
  15. Ventilation Equipment
  16. Window treatments

How much will it cost for the study?

Each property will differ determined by the size and scope of the project. If you provide the requested information we will perform a cost estimate for your review free of charge. This will help you determine up front, if the study will be cost effective for your property. The fee will be impacted by the location, accessibility, and quality of the records and documents that are available.

How Long will a study take?

From the time of receipt of all requested documentation, the study should not take more than 60 days.

Do my chances of audit increase once a cost segregation study is performed?

It is difficult to know what might trigger an audit. In our experience, the chance of being audited does not substantially increase after a cost segregation study.

Will professionals be available to assist in the event of an audit?

Yes, a member of our team will be available to assist in the event of an audit. In doing the cost segregation study our focus is to create documentation and support for our conclusions so that they are easily communicated and resolved with the IRS.

When items are classified as personal property in a cost segregation study, does that increase my personal property tax?

A cost segregation study will not typically impact personal property classifications. A cost segregation study is for depreciation purposes only. The classification for depreciation purposes does not change how the property is classified under the personal property tax laws of the jurisdiction where the property is located. We do recommend a review of the applicable personal property reporting.

For more information on cost segregation studies, please contact us at 888-499-8188 or email: info@centergytax.com.