Frequently Asked Questions
Browse answers about cost segregation, real estate tax strategies, and depreciation.
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Most studies take 2–4 weeks from document submission to final report delivery. Timeline depends on property complexity, how quickly you submit documents, and whether a physical or virtual site visit is needed.
Yes. Bonus depreciation under IRC Section 168(k) applies to property with a recovery period of 20 years or less. A cost seg study identifies and reclassifies building components into those shorter recovery periods. Without the study, your CPA has no engineering basis to claim accelerated deductions.
You can try, but the IRS expects your study to follow engineering-based methodology from the Audit Technique Guide. A DIY approach lacks the engineering credentials, component-level detail, and documentation required to survive an audit. For most investors, hiring a qualified firm is the safest and most cost-effective path.
Our Form 3115 Preparation service is built to do more than “fill out a form.” We handle the work that typically drives the time, risk, and back-and-forth when a method change is needed after cost segregation.
Here’s what’s included:
- A fully prepared Form 3115 that is consistent with the method change and the cost segregation results
- Completion of the Section 481(a) adjustment calculation, which is your cumulative “catch-up” depreciation amount between the prior depreciation already taken and the results of the cost segregation study
- Includes detailed supporting statements/attachments that explain the accounting method change being made, which explains in detail the comparison to the prior depreciation already taken, all done in a CPA/IRS-ready format
- CPA-ready support — we are available for any questions that your CPA may have regarding the Form 3115 itself, but please note that we cannot assist with the tax filing process
Many real estate-specific CPAs can complete Form 3115, but the specialized, time-consuming part is calculating and documenting the Section 481(a) adjustment correctly and packaging the method change so it’s consistent, defensible, and easy to file. That’s the value this service is designed to deliver.
Rapid Report works best for straightforward residential properties. For multi‑unit buildings, it’s intended specifically for duplexes, triplexes, and 4‑plexes where the units are identical or substantially similar across the building.
Rapid is not intended for multifamily properties with different layouts, mixed uses, or varying placed‑in‑service dates. Rapid also does not support splitting one property into separate reports (for example, a main house and an ADU).
If your property includes units with different layouts, placed-in-service dates, or configurations, you’ll need to purchase a separate report for each unique unit, or consider upgrading to a Fully Engineered Study.
As part of the process, we will coordinate an in-person inspection conducted by a trained inspector who captures detailed visual documentation, primarily through photographs, of the property’s condition, components, and improvements for our engineering team.
The inspection focuses on capturing detailed visuals of the property to support our engineering analysis.
The inspector will need full access to all readily accessible interior and exterior areas, excluding the roof and any areas that are not easily accessible. We recommend having someone from your team present to help facilitate access if needed.
The length of the inspection will vary depending on the size and complexity of the property.
This information usually comes from your CPA or accounting records, not from tax forms themselves. Most tax preparers maintain a depreciation schedule or fixed asset report (often generated from their accounting or tax software) that shows the property’s original basis and depreciation taken to date.
If you don’t have access to this schedule, your CPA can typically pull it directly from their system or accounting software. This information is important so the cost segregation study correctly accounts for any depreciation already taken and avoids double-counting.
According to the Cost Segregation Audit Technique Guide, the IRS requires that we "reconcile the cost basis of property in a study to the cost basis contained in the taxpayer's books and records" and verify how any prior accelerated depreciation affects your remaining basis.
When you've already claimed depreciation and filed taxes on a property, you've established what the IRS calls an "adopted method of accounting" that includes your depreciable basis, recovery period (27.5 or 39 years), and depreciation method.
According to the Cost Segregation Audit Technique Guide, any cost segregation study must be "easily reconcilable to the taxpayer's depreciation or fixed asset schedules". We review your existing depreciation schedules to ensure our cost segregation report properly ties to your established tax position and to identify your remaining depreciable basis after accounting for depreciation already taken.
This review is critical because we need to determine if you've already claimed accelerated depreciation benefits like Section 179 expensing, bonus depreciation, or 179D energy efficiency deductions - each of which reduces your remaining basis dollar-for-dollar and diminishes the potential benefits of cost segregation.
During our review, we also check for any errors your tax preparer may have made in the original setup, such as using the wrong recovery period or depreciation method. If we find errors, we can only recommend corrections through Form 3115 (Application for Change in Accounting Method) - not by amending prior returns.
As the IRS clearly states: "Amended returns or claims for adjustment, based on a cost segregation study performed after the original return was filed...should generally be disallowed on the basis that the taxpayer is attempting to make a retroactive method change". The goal is to maximize your tax benefits within the framework of your existing filings while ensuring everything can withstand IRS scrutiny.