Cost segregation roi

[Jason Fournier]

I had a conversation with my accountant and he doesn't think there's a good return on investment to do a cost segregation on any properties under $1 million so he doesn't recommend it. my properties have excellent cash flow and are triple net leases so I'm getting killed on taxes. Is there another opinion out there? I think the last cost segregation I paid $8000 on a commercial property. I was considering buying another property and doing the cost segregation study as a tax strategy. Anybody have experience with a lower price for a cost segregation study for residential on less expensive properties?

[Mohamed Youssef]

For a residential property, the cost of the study is usually around $3000 if you hire a reputable cost seg company that does a site visit, photos and a full report. I heard that there are some online companies that would do it for around $1000 but I personally would never use something like that, only because I'm not sure if it will hold in case of an IRS audit.

Cost seg. will definitely return the investment if you can use the losses generated from the accelerated depreciation to offset other income, i.e. you qualify for the Real Estate Professional Status or to offset the income generated from the other profitable properties. I believe you mentioned your other triple-net leases' cash flow.

This is just my opinion, but perhaps your CPA has a good reason for not recommending it based on your specific situation.