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What's the process?

 

1. Engage a Cost Segregation Specialist - Work with an experienced firm in doing cost segregation studies (CSS).
    

2. Conduct a Feasibility Analysis: Is it even worth it? Cost Segregation Studies take time and are costly, so determining the net benefit (tax savings minus the cost of the study and CPA firm charges, if any) is worthwhile.
    

3. Perform the CSS: If it’s worth it, then engage the qualified firm you found to do the CSS. They will inspect the building/site and then provide the final report, which includes the breakout of all the components of the building. They will need many documents from you.
    

4. File IRS Form 3115: This is what allows you to take that one-time large accelerated depreciation as an “adjustment” on your tax return to catch up on what you may have missed in prior years. If this is a new purchase, this form would not be needed. The IRS Code Section which allows this sort of adjustment is Section 481. See below for a description of relevant code sections.
    

5. Integrate With Your CPA: If you have a CPA or accountant, that’s great. Your CPA firm will be responsible for filing the tax return with the higher depreciation tax deduction, so it is important to involve them and let them know this is what you intend to do.