Frequently asked questions

It is the process of separating a building's cost into components with different tax recovery periods. Personal property is often recovered over 5 or 7 years and land improvements over 15 years, instead of the 27.5 or 39 years that apply to the building itself.

Buildings you own and use in a business or hold for rent, such as apartments, offices, retail, restaurants, industrial, and hospitality properties. Land is not depreciable, and a personal residence does not qualify.

Many components identified in a study may qualify for bonus depreciation. Under current federal law, the rate is 100% for qualifying property acquired after January 19, 2025. Property acquired under an earlier binding contract follows the older phase-down rates.

Depreciation you have taken may be recaptured. For personal property, prior depreciation is generally taxed as ordinary income on sale. Your CPA should factor this into whether and when a study makes sense.

The IRS audit techniques guide for cost segregation describes several approaches, from detailed engineering based on actual costs to less precise estimates, and lists the elements examiners look for in a quality study. Better documentation generally makes a study easier to support.

The property address and type, purchase or construction date, and cost basis. Drawings, closing statements, contractor ledgers, and invoices help a lot; not every study has all of them, and missing costs can be estimated.

No. Technology organizes and analyzes documents, and a qualified professional reviews the results. The study supports your tax adviser; it does not prepare or file your return.

No. The benefit depends on the property, its cost, when it was placed in service, and your tax position. Timing depends on property complexity and how complete the documents are.

Often, yes. For property already in service, the catch-up is usually claimed through a change in accounting method on Form 3115 rather than by amending returns. Your CPA decides how to apply it.

Yes. A study supplies classification and cost evidence; your CPA decides how to apply it, including elections and timing, on your return.

The contact form emails your message to CostSeg SI. The website does not keep a copy.