Timing
A Month-by-Month Planning Calendar for the Purchase Year
A practical calendar for owners who just bought or built a property and want to keep a cost segregation option open, from closing to the return.
Part of the Timing: Acquisition Year and Catch-Up hub. See also the FAQ and the glossary.
This page turns the timing concepts on this site into a simple calendar. Dates are relative to your closing or completion, not to any specific calendar year. Adjust to fit your situation and your preparer's schedule.
Before closing
Ask early questions. Tell your tax preparer you are buying and ask about the depreciation approach, especially whether you would be able to use accelerated deductions. This is the cheapest moment to identify problems, such as an entity structure that limits deductions.
Request the allocation. Ask whether the purchase agreement or closing statement can note a reasonable allocation between land and building, and whether an appraisal or property tax assessment will support it. See Land Versus Building Allocation and Why It Comes First.
Plan records. Decide where you will store documents.
Closing week
Save everything. Closing statement, deed, loan documents, inspection reports, and the property tax bill. Take dated photographs of the property as it stands, especially of any items that will be replaced.
Note the date. Record the date the property is first ready for rent or use, which may differ from the closing date. See Year of Acquisition: Why Timing Matters for a Study.
Month 1 to 2
Track improvements. Keep invoices for every repair and improvement, with dates. Separate repairs from capital improvements in your bookkeeping.
Start the participation log. If you plan to rely on material participation or real estate professional status, begin a contemporaneous log of hours and activities. See Material Participation Tests in Plain Language.
Decide on a feasibility review. Ask a provider or your advisor for a preliminary look at whether a study is likely to be worthwhile. Use the Cost Segregation Decision Checklist.
Month 3 to 4
Get quotes. Ask two or three providers for written scopes and fees. See How to Vet a Cost Segregation Provider and What Drives the Price of a Cost Segregation Study.
Confirm rules. Ask your preparer what bonus depreciation rules apply, since they may depend on the date of acquisition. See Bonus Depreciation: Rules as Currently Understood (Verify).
Month 5 to 8
Engage the provider. Schedule the site visit and deliver documents. See How Long a Study Takes and What You Provide.
Update the model. With a preliminary estimate, update your three-case model. See Cost Versus Benefit Without Guarantees.
Before the return is filed
Review the report. Have your preparer review the draft. Confirm that the schedule reconciles to the total cost. See What a Cost Segregation Report Should Contain.
Decide on extension. If the study is not ready, consider an extension. See Tax Year-End Timing and Study Deadlines.
Review estimated payments. Coordinate with the preparer.
After filing
Store the file. Keep the report, invoices, and workpapers together. See Audit Defense and Documentation for Cost Segregation.
Set a review date. Note when you will revisit the decision, for example at a refinance, renovation, or possible sale.
If you miss the window
If the first year passes without a study, all is not necessarily lost. A method change may allow a catch-up. See Catch-Up Depreciation With Form 3115.
Adjusting to your case
If you closed late in the year, compress the calendar. If you are buying several properties, batch the work. If you plan a renovation, see Timing for New Construction and Renovations.
A short list of documents to have in the folder by month three
By the third month after closing, aim to have the following in one folder: the closing statement, deed, purchase agreement, inspection report, property tax bill, insurance declarations, first-year repair invoices, photographs, and a note of the placed-in-service date. If you buy furniture or equipment, add those receipts. If you plan to rely on participation, add the start of your time log. This small folder makes every later step, whether a study, a return, or a sale, easier.
Questions to ask at each stage
At closing, ask whether an allocation between land and building is documented. In month one, ask whether repairs are capital or deductible. In month three, ask whether the study makes sense for your facts. Before filing, ask whether the report supports the schedule. After filing, ask what records to keep and for how long. Asking at the right moment prevents rework.
When the calendar does not fit
If you bought late in the year, some steps compress. If you closed months ago and are only now thinking about a study, start with quotes and the usability question. If you bought several properties, group the work. The calendar is a guide, not a rule.
Tips for portfolio owners
If you buy several properties in a year, create a template folder and a checklist that you reuse. Standardize how you record placed-in-service dates and improvements. Ask your preparer whether a common asset schedule format would help. When you use one provider for multiple properties, consider staggering delivery so that reports can be reviewed properly. Portfolio owners also benefit from reviewing their participation and passive loss position annually, since it changes as properties are added.
What if you have partners
Share the calendar with partners and agree who is responsible for each task. Partnerships often miss steps because no one owns them. Assign an owner for the log, the study, and the filings.
Reminder
This calendar is educational. Deadlines and rules depend on current law and your facts. Confirm with your preparer.