Can any “engineer” do a cost segregation analysis?
The short answer is no. IRS guidelines require both expertise in construction methods and tax law. The IRS Audit Techniques Guide for Cost Segregation states, “an underlying assumption is that the study is performed by ‘qualified’ individuals or firms, such as those employing ‘personnel competent in design, construction, auditing, and estimating procedures relating to building construction’ (PLR 7941002)”. Actually, there is very little true engineering involved in an “engineer-based” cost segregation study. The skills and expertise required are a combination of how properties are constructed, how that relates to tax law, and how to quantify and price each individual, segregated asset. Experts in tax accounting are required because each client’s situation is unique. They can help determine how – and even if – a cost segregation analysis can be applied to create value. Bottom line: Cost Segregation studies require an experienced team of accountants, appraisers, and constructions cost es
