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Tax, SDIRAs & Cost Segregation

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Costin I.
Pro Member
  • Rental Property Investor
  • Round Rock, TX
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950
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What should one use for the home basis value in a CSS?

Costin I.
Pro Member
  • Rental Property Investor
  • Round Rock, TX
Posted Feb 28 2024, 14:53

My understanding in this matter, there are several options for selecting the home basis for a cost segregation study:

A. Property appraisal (if you have one).

B. Tax Assessment – tax assessment for the property in question shows Land @ $48,920 and Improvement @ $174,300 (or a 22%/78% distribution from the total tax assessed value of $223,220).

Wouldn’t be fair to use the $174,300 valuation as the basis for the CSS? After all, I paid county taxes based on that.

Or, if we were mandated to use the acquisition cost (195K), shouldn’t we apply the same percentage to it (as in 78% of the purchase price)? 

C. Replacement/construction cost estimation as per insurance policy, $236K - can we use this one?

Whenever I tell the insurance the tax-assessed value of a property is X, they tell me is irrelevant, as they need to consider the replacement/construction cost for the policy premium.

D. Comparable sales

E. Engineering study

    Can I use the one with the biggest value, and gives me the biggest basis?

    CSS experts and Tax experts, what do you say?

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