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Cost segregation

Identify the property type and current use.

Gather relevant property acquisition documents (e.g., purchase agreement, closing statements).

Compile existing depreciation schedules and financial statements.

Determine the date the property was placed in service.

Schedule a site visit with a qualified cost segregation engineer.

Prepare a list of key areas and components to be inspected.

Coordinate with property management or tenants for access.

Conduct a thorough walkthrough of the property.

Document the condition and use of components (e.g., building systems, finishes).

Take photographs of significant areas for future reference.

Gather information on tenant improvements or special use areas.

Analyze the collected data and photographs.

Identify and categorize property components (e.g., land improvements, personal property, building structure).

Estimate costs associated with each identified component.

Prepare a detailed cost segregation study report.

Include a summary of findings, methodologies, and assumptions.

Provide a breakdown of asset classifications and their respective depreciation schedules.

Review the draft report with relevant stakeholders (e.g., property owner, tax advisor).

Make necessary adjustments based on feedback.

Finalize the report and prepare for distribution.

Provide the completed report to the property owner and tax advisor.

Discuss the potential tax implications and opportunities for accelerated depreciation.

File any necessary tax forms or amendments with the IRS based on the findings.

Monitor changes in property use or improvements that may affect depreciation.

Update the cost segregation study as needed for future tax years.

Stay informed about tax law changes that may impact cost segregation strategies.

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