Car wash buildings, including their offices and related land improvements, can be treated as 15-year property.

According to the IRS, a car wash is included in Asset Class 57.1 even if gasoline or petroleum products are not sold at the location. "A 15-year depreciation period applied to the entire car wash structure, including office space which was separated from the car wash frame by a wall (IRS Audit Technique Guide for the Car Wash Industry reproduced in the CCH IRS Positions Reporter at ¶202,950)."

Q: Ok, I am convinced that getting a cost segregation study done is the right move for my client. What are the next steps? How much time will be required of me and my client?

A: The process is pretty painless for both the CPA and building owner. The four major steps of the process are outlined below with general time guidelines.

Step 1: Preliminary Estimate of Benefits and Fee (15 minutes: Owner and/or CPA)

There is no reason to undertake a cost segregation study if it isn't going to save your client money. Fortunately you can obtain a free preliminary estimate of savings along with the fee to conduct the study. You will need your depreciation schedule (if not available, the building basis, capitalization date, and depreciable life used) and a brief description of the property including the location, size, primary use, any improvements, and any special circumstances (such as extra large parking lot, very ornate millwork, etc.) that would affect the outcome of the study. Paint as clear a picture as possible so that the estimate is tailored for your property.

If there isn't significant benefit, you have only spent 15 minutes of your time. No tax savings, but at least you looked into it and you didn't have to spend a lot of time with it. But if you are in the majority and the tax savings are significant, you can proceed to Step 2.

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