Why Should a Professional Handle Your Cost Segregation Study?

Written by Darren Labrie, CPA. Updated Apr 12, 2019.

DIYI’m a little bit of a do-it-yourselfer (DIYer). As with many other “I got this” zealots, I’m always game for saving a few bucks and invigorating the ego with bragging rights for completing a task or home-improvement venture that most others would call upon a professional to tackle.

But the ego doesn’t always know best. Along with the success stories, copious DIYers harbor tales of “I got this” floundering into “I should have gotten help with this,” and their money-saving efforts leaking into money-sucking.

Partnering With A Cost Segregation Consultant: What You Need To Know

The key to avoiding the “should-haves” of 20-20 hindsight and securing consistent wins – even in business - lies in knowing when to do it yourself versus when to embrace a professional.

Cost segregation studies just may be an undertaking worthy of professional assistance consideration.

For builders and businesses, cost segregation studies offer the opportunity to increase cash flow by classifying assets to accelerate depreciation and defer federal and state taxes.

However, the analyses of a thorough cost segregation study go beyond basic furniture, fixtures, and equipment claims and require careful scrutinization of construction-related costs over a 5, 10, and 15-year depreciation periods.

The inherent complexities within seem to habitually haunt many property owners - deterring them from pursuing these tax-saving studies. For those who do brave the assessments’ intricate nature without specialized help, many often fail to capture the full savings potential.

Here’s a look into a cost segregation study’s layers of multiplicity:

  • Detailed review of all property costs, including contractor’s application for payment, invoices, orders, appraisals, and depreciation schedules
  • Photographs of qualified construction items listed in the assessment
  • Documented inspection of facility’s condition
  • Reconciliation of construction costs and estimates incurred by tax
  • IRS-compliant report

If that peek into a cost segregations study’s intricacy wasn’t motivating enough, here are more justifiers for seeking specialized help.

4 More Reasons to Consider Cost Segregation Study Professional Guidance:

  • Calculation Complexity
    In addition to the above, the studies may be further complicated by legislative acts, courts decisions, and service rulings, thus clouding perspectives and conflicting guidance. A seasoned tax professional can navigate this tedious terrain.
  • Ensure Accuracy
    IRS holds strict standards for a cost segregation study’s methodology, documentation, depth, and format. And they’re meticulous in their reviewing process. Better to have a professional well-versed in cost segregation ensure its accuracy and avoid time-consuming and costly mistakes.
  • Reserve Resources
    Delegating your cost segregation study to an expert helps you maintain optimal productivity. Rather than expend time and energy forging new, arduous tax territory, your internal resources are free to attend their primary tasks and duties.
  • Optimize Tax Savings
    Ultimately, your goal is capturing your greatest money-saving potential. You never know what opportunities you may be overlooking or what mistakes might cost you saving possibilities.

CTI for Your Cost Segregation Study

Part of your success and caring for your clients is knowing which tax which endeavors to tackle yourself and which to commission to a specialist. Though you may be tempted to launch a cost segregation study on your own, you might want to ask if you’re willing to let your client lose out on substantial tax savings and dam up potential cash flow.

A cost segregation study expert will help you wade through the minutia, avoid inadvertent mistakes, and help you realize your clients’ full tax-saving potential. The accomplished tax specialists at CTI will employ their formidable expertise to deliver to you an accurate and thorough cost segregation study that captures all your clients’ saving potential.


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Topics: Cost Segregation, Property Incentives

Darren Labrie, CPA

Written by Darren Labrie, CPA

Darren brings more than 20 years of experience in tax credits and business incentives. In his current role, he focuses on the overall operations of the practice and ensuring the highest level of service to clients.