The solution is straightforward: it is not their area of expertise. Even though some construction owners and CPAs have considerable expertise with Cost Segregation, most don't. There is a dearth of teachers in this subject, which unfortunately contributes to the common misunderstanding that Cost Segregation can only be achieved on freshly acquired or built commercial property. These variables have caused countless tens of thousands of building owners to overlook this effective tax savings plan.
Mr. Client obtained a commercial real estate for $3,500,000 five decades ago and never finished a Cost Segregation Study.
Not only "may" a taxpayer do so but over 75 percent of GMG projects are older possessions. In the industry this is called the "Catch Up" method, and it can produce powerful results.
This is an example:
Virtually all commercial property owners think that "Cost Segregation" must be performed on newly acquired land. Yes, it's surely a fact that you can do Price Segregation on new buildings or recently renovated buildings but it is also true that Cost Segregation Studies are valuable for older buildings!
Doesn't every building owner and CPA know that?
Despite rumors to the contrary, Mr. Client admits he may now have an chance to gain from a research. Mr. Client hires an expert (GMG for example), who identifies 20% ($700,000) of elements that should have been allocated to 5-year life instead of 39 years.
Price Segregation on Elderly Buildings?
"A taxpayer may run a cost segregation analysis on used property and re-compute its own depreciation deductions for prior years".
The first sentence in the IRS Cost Segregation Audit Techniques Guide -- Chapter 6.2 reads: