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Bonus Depreciation Fee Options

Bonus depreciation is available for investment real estate, including commercial, multifamily and rental houses. (It is not available for owner-occupied houses.) Following is a summary of typical fees based on whether the scope of work includes an on-site inspection.

Bonus Depreciation / Cost Segregation Fee Options

Commercial/Multifamily Houses
Includes On-Site Inspection $5,000+ (1) $750 to 1,500+ (2)
No On-Site Inspection $2,500+ (3) $300 – $500+
  1. Cost segregation reports including a site inspection typically start at $5,000. Complex properties are more expensive and there can be discounts for a group of properties.
  2. Typically $1,500 for a single property if a site inspection is included; discounts available for groups.
  3. Most commercial properties can be reasonably done for a fee of $2,500 if no inspection is required. It may not be appropriate for complex properties and discounts are available for groups.

If you are interested in the less expensive option for a cost segregation study, we can provide details on how to obtain the best possible information without a site visit by a professional. These can include photos, interviews and an in-depth review of financial data.

For additional information on less expensive cost segregation reports, see the Fee Options tab.

Advantages and Disadvantages

The primary advantage of obtaining a cost segregation report without a site visit is the lower fee. The disadvantage is there is a possibility and perhaps a probability a small amount of short-life property will not be included without a site visit. We estimate the total depreciation will be 5 to 10% lower without the site visit.

Risk without Site Visit

Though cost segregation studies themselves are not a red flag for an audit, the IRS may have questions about the study should you be audited for other reasons. Few cost segregation reports are questioned by the IRS; our experience is about 1 in 500 to 1 in 1,000, but it can occur. In the event you select a cost segregation report without a site visit, and the IRS inquires about the report:

  1. We will visit the property (at our expense) and prepare an updated cost segregation report based on the site inspection.
  2. We will defend the study, answering all inquiries from the IRS, without charge to you. You will be responsible for no additional fees.

Audit History

To date, the IRS has inquired regarding about a dozen of our cost segregation reports. In each case, they were satisfied with the answers we provided. Of course, prior performance is no guarantee of future results.

Summary

Cost segregation reports can be prepared without a site visit. We request photos, financial information and attempt to interview relevant staff to maximize results and prepare the most accurate report possible. Your tradeoff is a lower cost but likely slightly lower bonus depreciation.

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