When is the best time to apply for cost segregation?
Good morning!  

I tried using the search feature but couldn't find an answer in this group.

I recently purchased a building just shy of $1 million.  We did replace the doors already from sliding to push/pull and a small remodel to expand our gym space (I run the gymnastics business out of the building). The next major repair which I'm hoping won't happen for another year or two is to replace the HVAC systems.

So my question is, would it be best to do the cost segregation this year or wait until we have finished updating the building over the next year or two?

And I've heard about people getting them done online or would you recommend an actual engineer coming to the place?

Any additional tips or things I should know.  I am not very familiar with the cost segregation process.

Thanks!
[{"id": "haxts2j", "text": "get an engineer coming with  quotes", "replies": [], "depth": 1}, {"id": "hayfuhp", "text": "Typically you'd want to have the study done as close to closing as possible. It doesn't always make sense to segregate. If you're not going to keep the building a long time or don't have much to segregate then the value of the accelerated depreciation won't offset the cost of the study.", "replies": [{"id": "hayh9cq", "text": "The building is about 20 years old on the first part, 10 years on the addition.  I plan on keeping the building long-term.", "replies": [{"id": "hayhje3", "text": "Current age shouldn't matter. It's just easier to do the study right after you bought it.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hazuhl5", "text": "https://www.linkedin.com/in/cost-segregation-yonah-weiss", "replies": [{"id": "hazulgz", "text": "Talk to Yonah Weiss on LinkedIn", "replies": [], "depth": 2}], "depth": 1}, {"id": "hb0megb", "text": "Are you going to claim partial dispositions for the doors you replaced? Those will need to be claimed in the year they occur or you lose the ability to take them. \n\nDo you have the income to absorb the additional depreciation deductions? If not, wait. Make sure you have income that can be offset. If you rent out a portion of the bldg you may be creating a passive loss you cannot use to offset ordinary income. \n\nAlso, don't burn down your income this year to the lower marginal brackets only to have create additional income in future years subject to a higher marginal rate. \n\nBut, if you have enough of the right income to absorb the additional deduction, the time to do the study is now. It's a time value of money play, so the sooner you defer paying income tax, the higher the NPV at any discount rate. \n\nI've done a few thousand of these studies, so if you have additional questions feel free to ask.", "replies": [{"id": "hb1kcv1", "text": "Nice. I have my own income from my business that I pay (W2, about $75k), rental income which will be about $25k, but I had to buy a few things (maybe $10k) and depreciation on those should be close to $10k. Then business income which at this point is close to $125k, may be close to $200k by end of year since I don\u2019t need to buy much else. I will also now have 4 months of rent ($7500) minus the mortgage/interest which will be shy of $5k. So I\u2019m thinking it\u2019ll be about $200k end of year.", "replies": [{"id": "hb1nord", "text": "Nice, indeed! If I were in your position,  I would get an estimate of the benefit with a fee quote, and then I would give it to my CPA to use in my end of year tax planning. Let me know if you'd like an est.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hbax1vg", "text": "Wouldn\u2019t you do the cost seg around the time of purchase, and then your subsequent improvement costs be it\u2019s own fixed asset? For example, you pay 10k for a HVAC system so you\u2019ll have a 10k bldg improvement asset on your books.", "replies": [{"id": "hbto4cm", "text": "That's what I'm trying to find out.  I believe from what I've read and videos I've watched, everything is placed into \"buckets\" or a time frame...5 year, 10 year, 20 year.  And with those buckets, things are sped up over that time frame instead of 39 years.", "replies": [{"id": "hjuz2wq", "text": "Are you aware of bonus depreciation? It was part of the 2017 Tax Bill and it allows 100% of short-term depreciation to be deducted in the first year such property is placed into service through 2022, gradually lowering the percentage thereafter back to the nominal 20%.", "replies": [{"id": "hjuzazh", "text": "Yes. This is what I\u2019m aiming for with my accountant.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hlzrjbf", "text": "I heard there are certain qualifications in order to use the benefits of CS in your taxes such as qualifying as a real estate investor. Does anyone know?", "replies": [], "depth": 1}, {"id": "ituuoej", "text": "There seems to be some confusion around a cost segregation studies. \n\nInvestors Please...Pay yourself first.\n\nStrategic real estate tax strategies will increase your cash flow and decrease your tax liability.\n\nBrakes Plus \u2013 Phoenix, AZ\nPurchased 01/2018, appx 5,000 sf\n\nPP $1,091,075 \n\nOwner's 2021 catch-up depreciation expense without cost segregation  - $0\n\nOwner's 2021 catch-up depreciation expense with cost segregation - $431,554\n(accelerated amount was 51.74%)\n\nCost segregation studies is a must for anyone that owns commercial real estate!!\n\nThis is just one example right now we're at 100% bonus depreciation starting January 1, 2023 it goes down to 80%\n\nOh if you have any questions or need help with this just DM me", "replies": [], "depth": 1}]