Cost Segregation Study

Why It Matters

Cost segregation identifies property that would normally be depreciated over 27.5 or 39 years and categorizes components eligible for accelerated depreciation. That means bigger deductions sooner, and more working capital for your business.

For example:

  • $5M building = approx. $250,000 in net present value (NPV) tax benefit

  • Accelerated depreciation generates tax benefits worth 20x the cost of the study

What Is a Cost Segregation Study?

A Cost Segregation Study is a tax strategy used to accelerate depreciation on real estate. Instead of depreciating the entire building over 27.5 or 39 years, we break out qualifying components—like electrical systems, flooring, cabinetry, and landscaping—and reclassify them into shorter asset lives (5, 7, or 15 years).

The result?
Larger depreciation deductions now, lower taxable income, and improved cash flow—all without changing ownership or operations.

This strategy is especially valuable for:

  • Commercial and residential rental properties

  • Renovations, remodels, or expansions

  • Real estate purchased or improved within the last 15 years

You can even apply this retroactively and "catch up" missed depreciation—no amended returns required.

What’s Included in a Cost Segregation Study?

  1. On-site inspection and blueprint analysis

  2. Reclassification of real estate components into 5, 7, or 15-year lives

  3. Electronic deliverables formatted for your tax team (*Tax filing services also available)

  4. Certified report aligned with ASCSP standards

  5. IRS audit support included

Is This Service Right for You?

“I bought or built a property recently—should I consider a study??”

Yes. If you’ve purchased, constructed, renovated, or improved real estate in the last 15 years, a cost segregation study could significantly reduce your tax burden.

“What’s the minimum property value for this to make sense?”

We typically recommend this service for properties with a cost basis of $750,000 or more (excluding land). If you own a residential rental with 6 units or fewer and at least $150K in basis, you may qualify

“Will I benefit if I’m not paying much in taxes?”

No—this strategy is designed for businesses or individuals with taxable income. If you’re not currently paying federal or state income tax, there’s no immediate benefit.

“Who is this not a good fit for?”

  • Nonprofits or tax-exempt entities

  • Co-ops and universities

  • REITs, unless focused on controlling dividend timing

  • Short-term property holders not pursuing a 1031 exchange

“I don’t plan to hold the property long—should I still do it?”

It depends. The best candidates are those holding real estate for 5 years or more. If you’re planning to sell soon, consider whether you’ll be using a 1031 exchange to defer recapture tax.

How It Works

  • We start with a quick call to learn about your properties and gather information about your overall tax strategy.

  • We gather additional data related to the properties usually with more granular specifics

  • We gather property, depreciation, and cost info

  • We conduct an onsite review and will gather any blueprint or other information related to the properties to begin the study.

  • We issue a final report and will work with providing your tax preparer the software export needed to be included into your tax return/amendment.

  • In the unlikely event of Audit our team will work on your behalf to provide you support through that challenge.

Let’s see if we’re a fit—and what it would look like to have this off your plate.

Why Work With Us?

Reports certified by the American Society of Cost Segregation Professionals (ASCSP)

  • Seamless coordination with your CPA or tax advisor

  • Upfront, flat-fee pricing and practical implementation support

  • Ongoing advisory—no nickel-and-diming

We’re not just a vendor—we’re part of your financial team!

Pricing & Timeline

Flat rate pricing: typically $5,000–$15,000 depending on property size

  • 30–90 day turnaround from when we receive your documentation

  • No-obligation preliminary review included

We’ll let you know if the benefit justifies the investment—before we get started.

FAQs

  • It reclassifies parts of your building—like electrical, plumbing, or finishes—from long-term (27.5 or 39-year) depreciation to shorter-term (5, 7, or 15-year) asset lives. This accelerates your depreciation, increasing deductions now and improving cash flow.

  • No. IRS procedures allow you to catch up missed depreciation without amending prior years.

  • Yes. As long as the improvements or acquisition happened within the last 15 years.

  • Smaller properties may qualify too—especially with improvements over $150K.

  • You’ll receive a certified engineering report with:

    • A breakdown of reclassified components

    • Schedules formatted for import into most major tax software

    • Clear documentation for your CPA

    • Support files for Form 3115 (if applicable)
      This makes implementation seamless.

  • No. In fact, the IRS encourages properly documented cost segregation when done by qualified professionals. Our studies are reviewed by engineers, stamped by ASCSP, and include audit defense support if ever needed.

  • Yes. Renovations, expansions, leasehold improvements, and remodels all qualify. Even partial improvements (e.g., HVAC upgrades or lighting systems) can create depreciation opportunities.

  • Before anything is signed, we run a free preliminary review. Based on your property and tax situation, we’ll estimate your benefit—and if it’s not worth it, we’ll tell you upfront.