Cost Segregation

Accelerate depreciation deductions and increase cash flow with a cost segregation study.

Your real estate assets may have hidden value. Your building is a key asset, and with any major investment, you want to get the best return.  

A cost segregation study examines the assets of your building and identifies those that can be depreciated over different and faster recovery periods than if they remained classified as residential real property (27.5 years) or nonresidential real property (39 years). When done correctly, cost segregation studies accelerate your depreciation deductions, resulting in a lower tax bill and an increase in current cash flow. 

The IRS requires that cost segregation studies be performed by firms that demonstrate engineering, construction, tax law and accounting expertise. Eide Bailly’s cost segregation professionals are nationally recognized industry specialists that meet these requirements focused on timely delivery of your study and its components. Our cost segregation studies include complete estimates, technical report, audit support (if needed), invoice review, computed benefit and/or general guidance. 

Our Cost Segregation Study Process

When we perform a cost segregation study, you can expect:

• An initial proposal assessment to consider the possible tax benefits. This is a free proposal that will lay out your overall scope, benefits and fees.
• A kickoff call is performed between our fixed asset services team members and your team to confirm everyone is on the same page and ensure efficiency in gathering the necessary documentation.
• The site is visited to determine if the building plans are accurate and to identify the various assets that can be moved into the five-year, seven year, and fifteen-year “buckets.” Pending the scope of the analysis, additional documentation is obtained related to any energy efficiency property that may qualify for additional deductions or tax credits. The property is also thoroughly documented in case the study is ever examined by a third-party.
• An Eide Bailly construction engineer will use the building plans or on-site documentation to determine measurements, electrical power loads, and other counts of the building components and classify them according to the recovery periods referenced above.
• The segregated building components are then valued using an accepted third-party source that is consistently applied to all the building components.
• A thorough report is prepared explaining the process and, more importantly, the tax analysis for those items moved to a five-year, seven-year or fifteen-year recovery period.
• The final step is implementation into your depreciation software. Our fixed asset services team has experience in a wide range of software and systems to ensure your results are properly realized.