You usually would not pay back all of the savings generated as recapture can be minimized by assigning a smaller gain amount to the personal property we identify in the study. This can reasonably be done if the personal property has been in service for close to five years as which point it is fully depreciated. At this point it has diminished in value, and It is not worth as much as it was originally bought for. Therefore, a smaller gain can be assigned to these assets resulting in less recapture. More gains would be assigned to items that appreciate such as the land and building structure. If this is done, a cost segregation can still be beneficial even if a sale occurs soon after application of the study.

Another option to defer gains made in the sale of a building is a 1031 Exchange. The Tax Cuts and Jobs Act eliminated the ability to include personal property in a 1031 Exchange. However, it was clarified that the definition of personal and real property is done at the state level for 1031 Exchange purposes. This means that some, possibly all, of the personal property identified in a cost segregation study could be included in an exchange depending on the specific state definitions.