The Cost Seg Study Look-Back: It's Not Too Late with Amar Patel

Amar Patel is a CPA and one of the partners at KBKG, where he heads up the Southeast cost segregation practice out of Atlanta. He spends his days inside other people's depreciation schedules, and the first thing he looks for is one line labeled "building" being written off over 27 and a half or 39 years. His point for anyone who skipped the study at closing: "It's kind of a common misconception in the industry... cost segregation needs to be done in the year I buy an asset, and that's not necessarily true."

Amar walks through the look-back study, which goes back to a property you've owned for years and pulls the missed depreciation into the current tax year without amending a prior return. He also explains why he rarely looks back past 2018 on acquired property, and what the IRS takes back through recapture when you sell.

What Ed and Amar get into:

• How a cost segregation study finds the parts of a building that depreciate over 5, 7 and 15 years
• Why part of the electrical that feeds the refrigerator can depreciate with the refrigerator
• Recapture, and why Amar asks every client up front whether they'll hold the property past three years
• The look-back study on a building you already own, and where Amar draws the line on how far back to go
• What happens to the strategy if bonus depreciation changes with the next administration
• Short-term rentals, passive losses, and when the deductions can reach W-2 income
• The self-rental setup Amar sees with doctors and dentists who own their building
• How a 1031 exchange changes what you can depreciate going forward
• The service line he passed on early in his career, and the one he said yes to at KBKG

Also in this episode, at 25:26, Questions from the Underground: To Contingency or Not to Contingency. A Connecticut investor told Ed over coffee that he stopped carrying a rehab buffer because it always gets spent. Ed explains why he thinks that's wrong, why a lender reads a budget with no contingency as a red flag, and why a contractor eating your reserves through change orders is a contractor problem, not a buffer problem.

This episode is general education on how cost segregation works. It is not tax advice. Talk to your own CPA about your situation...or reach out to Amar directly.

Learn more about KBKG at kbkg.com, try the DIY tool at costsegregation.com, or find Amar on LinkedIn.

Amar's book recommendation: Process!: How Discipline and Consistency Will Set You and Your Business Free

Chapters:

• 00:00 Cold open: freeing up cash investors didn't know they had
• 01:11 Welcome, Amar Patel of KBKG
• 03:43 How a cost segregation study works
• 08:40 Recapture: what comes back when you sell
• 10:41 The most common depreciation mistake and the look-back study
• 13:26 If bonus depreciation changes again
• 16:58 Short-term rentals, passive losses and W-2 income
• 25:26 Questions from the Underground: To Contingency or Not to Contingency
• 28:43 Year-end planning before the fourth quarter
• 31:21 Lightning round and where to find Amar

Got a question you want answered on the show? Send it to ed@clarkst.com.

Recorded October 2026.

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