Resources & FAQ

Cost segregation is a tax strategy that allows property owners to reclassify certain building components from long-life depreciation categories (27.5 or 39 years) into shorter categories (5, 7, or 15 years). An engineering-based study identifies assets like carpeting, cabinetry, certain electrical systems, landscaping, parking lots, and decorative finishes that qualify for accelerated depreciation. This puts more money back in your pocket sooner by increasing your depreciation deductions in the early years of ownership.

Savings vary based on your property type, value, and construction. As a general guideline, cost segregation typically reclassifies 15-40% of a building's depreciable basis into shorter-life categories. For a $1 million property, this could translate to $100,000 to $400,000 in accelerated depreciation deductions. The actual tax savings depend on your tax bracket and other factors. We provide a free estimate with every proposal so you know the expected savings before committing.

Almost any commercial or income-producing residential property can benefit from a cost segregation study. This includes short-term rentals (Airbnb, VRBO), apartments and multi-family buildings, office buildings, retail spaces, restaurants, hotels, medical and dental facilities, warehouses, manufacturing plants, and self-storage facilities. Generally, a cost segregation study is most beneficial for properties valued at $500,000 or more.

The ideal time is the year you purchase, build, or renovate a property, as this maximizes your first-year deductions. However, a cost segregation study can be performed at any time. If you've owned a property for years and never had a study done, you can still benefit through a "look-back" study that allows you to catch up on missed depreciation deductions in a single tax year — no need to amend prior returns.

Yes! Through IRS-approved procedures (filing Form 3115 for a change in accounting method), you can perform a "look-back" cost segregation study and capture all the accelerated depreciation you missed in prior years — all in a single tax year. This is often referred to as a "catch-up" depreciation adjustment, and it can result in a significant one-time deduction. There's no need to file amended returns.

Absolutely. Cost segregation has been a well-established tax strategy for decades and is fully supported by the IRS. The IRS even published an Audit Techniques Guide for cost segregation studies, which provides guidelines for both taxpayers and auditors. Our studies follow these guidelines precisely, ensuring your report is fully compliant and audit-ready.

Most studies are completed within 4-8 weeks from the time we receive the necessary documentation. The timeline depends on property complexity and document availability. We work with you to ensure the study is completed well before your tax filing deadline. For time-sensitive situations, we can often accommodate expedited timelines.

Most property owners see a return of 5-10 times the cost of the study in first-year tax savings alone. For example, if a study costs $7,500 and generates $50,000 in additional first-year depreciation deductions, a property owner in the 37% tax bracket would save $18,500 in taxes — a return of nearly 2.5x in direct tax savings, with additional benefits in subsequent years.

Not necessarily. While some studies include on-site inspections, many can be completed using construction documents, blueprints, photographs, and publicly available property records. Our team will advise you on what's needed based on your specific property. If a site visit is beneficial, we'll coordinate a convenient time.

Cost segregation and bonus depreciation work hand-in-hand. Once a cost segregation study reclassifies building components into 5, 7, or 15-year categories, those assets may be eligible for bonus depreciation, which allows you to deduct a significant percentage of the asset's cost in the first year. Note that bonus depreciation rates are scheduled to phase down, so acting sooner can maximize your benefit. Contact us to understand how current bonus depreciation provisions apply to your situation.