Understanding Cost Segregation Study Costs and Timing

A cost segregation study can cost anywhere from $3,000 to $10,000, with the average for most commercial properties falling in the $5,000 to $6,000 range, irrespective of the property value. The timing of when to conduct the study is crucial, with the first year of ownership being ideal. However, going back several years without amending tax returns is also possible to catch up on missed depreciation. It is recommended to go back a maximum of five to six years to maximize the benefits, as after a certain period, the depreciation deductions might have already been mostly claimed. There is no set limitation on how far back one can go, but the practical benefit diminishes after a certain number of years. Filing a Form 3115 to adjust the accounting method and catch up on missed appreciation does not pose any additional risk, unlike amending tax returns which may increase the likelihood of an audit.