Commonly asked questions about Cost Segregation

Cost segregation can seem confusing at times and is still, after over 20 years of being an accepted practice and at times even preferred by the IRS, a relatively unknown procedure to most commercial property owners and even some CPA's. Below are some commonly asked questions and answers to help you gain a better understanding of how a National Asset Partners cost segregation study can benefit you.


Q. How is depreciation impacted under the Alternative Minimum Tax (AMT) system?

Generally, for improvements placed in service after 1998, personal property identified in a cost segregation study will require depreciation to be calculated using a 150% declining balance method as opposed to the 200% declining balance method. Although the acceleration of depreciation is slower under the 150% declining balance, the benefits of a cost segregation study are not impacted significantly since the recovery periods remain the same. For improvements placed in service before 1998, the calculations are more complex and benefits from a cost segregation study are likely to be somewhat lower than originally anticipated.

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