Duplex with one owner-occupied unit Cost Segregation: Study scope

The issue this scenario creates

A two-unit property can combine personal and rental use. The provider needs a supported allocation for roof, structure, and other systems serving both units.

The main objective is to map rental-only components and shared costs across units. A useful analysis makes the ownership and timeline understandable before anyone applies a reclassification estimate. Do not replace missing history with an assumed new purchase or a generic depreciation percentage.

Study scope approach

A scope should identify the property interest, relevant buildings and components, acquisition and improvement periods, available records, and excluded work. It should describe the report and schedules being delivered, who performs the technical work, and how missing information will be handled. A broad promise to maximize deductions does not resolve these operational questions.

Request written confirmation of the scope, fee, deliverables, evidence requirements, and change process. Separate property analysis from return preparation and advisory services. If the facts change during intake, ask whether the engagement needs a revised cost pool or additional work instead of quietly expanding the original scope.

Scenario-specific evidence

Start with unit floor plan, ownership and occupancy records, shared-system invoices, and asset schedules. Connect each record to the event it establishes. Explain conflicts and missing years rather than presenting a single unexplained number.

Hypothetical example

The owner renovates the leased apartment and replaces a boiler serving both units.

The review should guard against assigning the full shared boiler cost exclusively to the rental unit. Resolve that concern using the specific records above. The example illustrates a process question, not an available deduction or an actual completed client study.

Question to resolve before closing this task

Does the written engagement describe the ownership and events above, and does it exclude any work the owner expects?

Write down the response and retain the supporting record. Assign an owner to any remaining issue and confirm whether it changes the study scope, projected benefit, delivery timeline, or implementation cost. A property report and a usable deduction are separate steps in the workflow.

Practical completion checklist

• Identify the actual property owner and reporting taxpayer.
• Preserve original records and explain missing information.
• Keep existing assets separate from later additions and replacements.
• Confirm the provider and return preparer have accepted the same basis reconciliation.
• Retain the final report and the schedules actually implemented.