If you’ve ever considered a cost segregation study to maximize your tax savings, you’re probably aware of its potential benefits. However, not all cost segregation providers are created equal, and for some unfortunate taxpayers, choosing the wrong one led to significant financial issues. Below, we share four real-life examples and show how working with the right provider, like Cost Segregation Authority, can help you avoid them.
1. Audited, but the Provider’s Gone
Imagine being in the middle of an audit and discovering that your cost segregation provider has gone out of business. That’s exactly what happened to one unfortunate client. When the IRS came knocking, their provider was nowhere to be found, leaving them with no support, no defense, and no one to answer critical questions.
At Cost Segregation Authority, we ensure this never happens to our clients. Our reports are designed by CPAs for CPAs, and they strictly adhere to the IRS Cost Segregation Audit Guide. Even better, we stand by our work, providing support and defense at both the agent and appeals level. With over 20,000 studies completed across all 50 states and multiple foreign countries, we’ve been in business since 2006 and aren’t going anywhere.
2. No Income to Offset
One client with a long-term rental property spent $75,000 on a cost segregation study, expecting to see substantial tax benefits. However, after deducting expenses like their mortgage and repairs, they were left with only $7,000 in passive income. Since they didn’t qualify as a real estate professional, they couldn’t fully utilize the accelerated depreciation.
Unfortunately, this is a common scenario for those who rush into a study without asking the right questions. At Cost Segregation Authority, we work closely with your CPA and ask strategic questions upfront to avoid these types of outcomes. This ensures you can maximize your deductions and avoid unpleasant surprises when tax season arrives.
3. The “Quick & Easy” DIY Study
Beware of the so-called “quick and easy” online cost segregation studies. One client opted for a low-cost provider, paying just $1,000 for what they thought would yield a strong return. The result? A disappointing increase of just a few thousand dollars in depreciation.
Frustrated, they turned to us for help. We conducted a thorough, high-quality study, and the results were impressive—over $50,000 in increased depreciation in the first year alone. The lesson here is clear: shortcuts rarely pay off. At Cost Segregation Authority, we ensure that each study is customized to your needs and optimizes your tax savings.
4. The Low-Cost Trap
When a “cheap” service turns out to be costly, it can have serious financial consequences. One client thought they were saving money by choosing a low-cost cost segregation provider. However, after receiving the report, they realized that crucial elements were missing—such as Form 3115, depreciation schedules, and land value allocations. They had to pay their CPA an additional $2,800 to fix these issues, turning what seemed like a deal into a costly and inefficient process.
At Cost Segregation Authority, we provide everything you need upfront, including detailed depreciation schedules, 481(a) calculations, Form 3115, and audit support—at no extra cost. There are no hidden fees with us, just comprehensive services that keep your tax strategy on track.
Avoid Cost Segregation Pitfalls
Choosing the cheapest or fastest option isn’t always the wisest decision when it comes to cost segregation. At Cost Segregation Authority, we take a strategic, thorough approach to ensure your tax benefits are maximized and your financial future is secure. Our proven track record—more than 20,000 successful studies since 2006—speaks for itself. Before you find yourself in a challenging situation, let us help you maximize your tax savings with expert guidance.
Contact us today to learn how we can assist you in avoiding these pitfalls and optimizing your tax strategy.
