Cost segregation is governed by detailed IRS guidance and tax regulations that affect how commercial real estate owners depreciate property. The resources below provide additional insight into depreciation rules, bonus depreciation, and how cost segregation studies are evaluated by the IRS.
IRS Cost Segregation Audit Techniques Guide
The IRS Cost Segregation Audit Techniques Guide provides detailed guidance used by IRS examiners when reviewing cost segregation studies. It outlines acceptable engineering methodologies, documentation requirements, and common audit considerations for commercial property owners and tax professionals.
This document is often referenced when preparing defensible cost segregation reports.
- IRS Cost Segregation Audit Techniques Guide (Updated June 2022)
IRS Publication 946 – How to Depreciate Property
IRS Publication 946 explains the rules for depreciating business property, including recovery periods, depreciation methods, and special depreciation allowances. It covers MACRS depreciation schedules and provides foundational guidance for property owners claiming depreciation deductions.
- IRS Publication 946 How To Depreciate Property (For 2022 Returns)
Bonus Depreciation Rules (CCH Tax Guidance)
Bonus depreciation allows qualifying property components identified in a cost segregation study to be depreciated more quickly, sometimes in the first year the property is placed in service. The CCH guidance explains how bonus depreciation works, eligibility rules, and recent legislative changes affecting real estate investors.
- Bonus Depreciation Rules (Commerce Clearing House CCH)
Qualified Improvement Property (QIP) Guidance – The Tax Advisor
Qualified Improvement Property refers to certain interior improvements made to commercial buildings after they are placed in service. The Tax Advisor explains how QIP interacts with bonus depreciation and how the CARES Act corrected previous depreciation rules that affected commercial real estate.
- Qualified Improvement Property (The Tax Advisor)
Cost Segregation After Tax Reform – National Association of Realtors
Following the Tax Cuts and Jobs Act, cost segregation became even more valuable for commercial property owners. This resource from the National Association of Realtors explains how tax reform expanded bonus depreciation and accelerated depreciation opportunities for real estate investors.
- Cost Segregation Post-Tax Reform (National Association of Realtors)
IRS Tangible Property Regulations Overview
The IRS tangible property regulations provide rules for distinguishing between capital improvements and deductible repairs. Understanding these regulations is critical when determining how property components identified in a cost segregation study should be treated for tax purposes.