Does the IRS require site visits for cost segregation studies?

[Melanie Baldridge]

A question that we get:

"Does the IRS require site visits for cost segregation studies?"

While the IRS does not mandate a physical site visit, the IRS cost segregation audit technique guide (ATG) does suggest conducting “field inspections.”

It’s important to note that the ATG is not an official IRS document.

It serves as a guide and cannot be used, cited, or relied upon as an authoritative source.

However, the recommendations in the ATG are worth considering.

According to the guide:

“A field inspection is recommended to document the physical details of the building, type of construction, materials used for construction, the assets contained in the building, the size and types of building systems, and any land improvements that were included in the purchase of the property and the condition of that property at the time of purchase.”‍

So while the IRS does not require a site visit for cost segregation studies, following the guidance from the cost segregation audit technique guide can be beneficial.

At RE Cost Seg, we’ve adopted a modern approach that goes beyond these recommendations, utilizing video walkthroughs to provide a thorough, efficient, and documented inspection process.

This ensures that every detail is captured, giving our clients confidence in the accuracy and quality of their cost segregation studies from us.

[Dylan Brown]

This is a fascinating debate that I want more people to way in on for sure.  The debate that is brewing is whether client-provided walkthrough imagery is as reliable as having the cost seg engineer survey the building components on site.  My thought is that with the increase in technology, the answer is probably "yes" but I still feel the most comfortable when an engineer is on site doing the site visits.

I want to hear what other cost seg providers are thinking here.