In this episode, Toby Mathis, Esq., interviews Chris Streit from CSA Partners about the five critical elements that cause cost segregation studies to fail under IRS audit. Chris, whose firm has completed tens of thousands of cost seg reports, reveals that 80% of studies contain fatal flaws that will not survive scrutiny. The conversation covers the importance of establishing proper real estate professional status or short-term rental qualification before taking accelerated depreciation.

Chris explains why land value allocation is the first thing the IRS examines and how it must use county valuation at time of purchase—not rule-of-thumb percentages. They discuss the non-negotiable requirement for physical site visits with video documentation, the necessity of using current RSMeans software with local jurisdiction pricing (not outdated books or averages), and why having accessible audit support is crucial when the IRS comes calling. Chris emphasizes that the burden of proof is on the taxpayer, making professional documentation and expert backup essential. Tune in to learn how to protect your cost segregation deductions and avoid costly audit failures!

Highlights/Topics:

(00:00) - Introduction: Why Your Cost Seg Will Fail
(00:54) - Element #1: Real Estate Professional Status
(02:46) - Element #2: Land Value Allocation
(09:06) - Element #3: Engineered Study & Site Visits
(12:38) - Element #4: RSMeans Cost Data Requirements
(15:39) - Element #5: Audit Support & Accessibility
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Resources:

Request a FREE Cost Segregation Benefit Analysis

https://aba.link/vsh

Tax and Asset Protection Events

https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=your-cost-segregation-will-fail-audit-if-you-miss-these-5-elements&utm_medium=podcast

Learn more about CSA Partners: https://csap.com/

https://csap.com/

Anderson Advisors

https://andersonadvisors.com/

Toby Mathis YouTube

https://www.youtube.com/@TobyMathis

Toby Mathis TikTok

https://www.tiktok.com/@tobymathisesq

Clint Coons YouTube

https://www.youtube.com/@ClintCoons