For business owners and building owners, a cost segregation allows fast depreciation, up to 15-25% of building components can be fast-forwarded to the first five years of ownership. Commonly called "cost segregation study," "cost segregation analysis," or "cost allocation study," cost seg studies are powerful money-saving tools.

Directing internal taxpayers to proper depreciation, The IRS Cost Segregation Guide Technique Guide directs clients to use an engineering/construction specialist. With hundreds of commercial inspections, thousands of residential inspections, and hundreds of hours of training, WBTreece Consultants has what it takes. "A quality study identifies the preparer and always references their credentials, experience, and expertise in the cost segregation area."

To compute depreciation for federal income tax purposes, taxpayers must utilize the correct method and appropriate recovery time for each asset or property. Whether purchased or built, the property at hand may contain various asset kinds with various recovery periods. In these cases, property is often divided into different parts or asset groupings with the same recovery times and placed-in-service dates.

Whether real or lump-sum costs are used, our process is straightforward and fully documented. Cost estimation procedures would be needed to "segregate" or "allocate" expenses to specific property components (e.g., land, land improvements, buildings, equipment, furniture and fixtures, etc.). It also allows for 80% or 100% bonus depreciation, depending on the year.

For the survey technique, the expert conducts a site examination and makes a list of every part of the property. The cost segregation professional will next send a formal request for pricing information to the contractor or subcontractors. How accurate the pricing information is for each component will depend on how long ago the job was completed.

Read more about best practices for Cost Segregation Studies.