Accountants familiar with cost segregation studies and depreciation schedules, any advice?

My understanding of the purpose of a cost segregation study is to be able to do an accelerated depreciation schedule of a property. So instead of 27.5 years, you can take larger tax benefits over 5, 7 or 15 years. However, the research I have done shows the property needs to be worth at least $500K to 1 Million.

The investment property I purchased was only $140K. I was given the cost segregation study from the development, but my question is, does this allow me to benefit from an accelerated depreciation?

Thank you for taking the time to answer!

A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $500,000. A cost segregation study is most efficient for new buildings under construction. Building types studied include

Apartment complexes
Automobile dealerships
Distribution centers
Fast food restaurants
Food processing facilities
Hotels/motels
Manufacturing plants
Medical centers
Nursing homes
Office buildings
Retail chains/franchises
Shopping malls
Sports stadiums
Amusement parks
Supermarkets
Casinos

From your cost segregation study, you would need to identify structural components (if any) and segregate them from those linked to the property.

If youre referring to residential real estate, like an apt. or home, you would need to depreciate it over 27.5 years. There is probably not much benefit from cost segregation for you.

There are very few items that can be segregated cost-wise on a building with that low of a cost because most components in that size building are integral to the structure. Cost segregation divides out from "real estate" those physically separable items that can be considered "personal property".

There may be some items in your $140K property that can be "segregated", but the savings do not offset the cost of a typical study, which can run anywhere form $2500 on the low end, to tens of thousands of dollars on the high end.

- A Damn Fine Tax Advisor