When and How Often Should You Conduct A Cost Segregation Study?

Cost segregation is an essential tax strategy that offers property owners an opportunity to save money on taxes. This strategy helps property owners based on the premise that not all aspects of a building should be subject to the same tax treatment. Rather, assets within a building have different depreciation schedules, and by segregating these assets, property owners can accelerate depreciation and reduce their tax liability. In order to capture these benefits, a cost segregation study is needed to identifying and classify the value of property assets, but how often should you conduct one? In this blog post, we’ll delve into the topic and help you understand the ideal frequency for conducting a cost segregation study.

When it comes to determining how often a cost segregation study should be done, several factors come into play. Initially it is recommended to conduct a cost segregation study as soon as you purchase or construct a new building.? This will provide you the largest benefit for your building and allow you to benefit from the reinvested tax savings for the maximum time possible. Going forward, it is recommended that property owners obtain a cost segregation study every time they undergo significant renovations, or make significant leasehold improvements. This is because these activities can significantly impact the value of the assets within the property, and it’s essential to capture them accurately for tax purposes. The rules, regulations and surrounding opportunities to save tax dollars are vast for renovations.? It is best to seek professional advice on your specific situation when you increase the value of your building asset.