Our Specialty

Cost segregation, coordinated by the firm that files your return

We manage the study and prepare the return, so the deduction actually lands where it was supposed to, and someone is still here when the IRS asks about it.

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The Idea

A building is not one asset

When you buy a property, the default tax treatment writes the whole thing off over 39 years, or 27.5 years for a residential rental. That treats the carpet, the appliances, the dedicated electrical serving your equipment, the parking lot, and the landscaping as though they were the roof and the foundation.

They are not. Under MACRS, much of what you bought is §1245 personal property with a 5- or 7-year life, or a land improvement at 15 years. A cost segregation study is a detailed analysis that identifies those components, values them, and documents the basis for the split.

Because bonus depreciation applies to property with a recovery period of 20 years or less, reclassifying into those buckets is what makes a large first-year deduction possible at all.

On the current bonus rate: federal bonus depreciation has changed several times in recent years. It began phasing down in 2023, then Congress restored a 100% rate for qualifying property acquired after January 19, 2025. Confirm the rate that applies to your acquisition date before relying on any figure on this page.

Before and after a cost segregation study on a $1,000,000 property. Before: an $800,000 building depreciated over 27.5 years, roughly $29,091 per year, plus $200,000 in land that cannot be depreciated. After: the building's basis drops to $600,000, still over 27.5 years (39 if commercial), while $120,000 becomes personal property depreciated over 5 or 7 years, $80,000 becomes land improvements depreciated over 15 years, and the same $200,000 in land remains non-depreciable. A summary row shows $800,000 of depreciable basis, with 15% ($120,000) as personal property, 10% ($80,000) as land improvements, and the remaining $600,000 as building.

$200,000 moves onto 5-, 7-, and 15-year lives. Illustrative example for a residential rental, not a client result. Your split depends on the property and an actual study.

Illustrative Example

You bought the building. You may not be maximizing the benefit.

The default is to write a commercial building off over 39 years and a rental over 27.5. But a meaningful share of what you bought is not the building. It is appliances, flooring, dedicated electrical, signage, paving, and landscaping, and those carry 5-, 7-, and 15-year lives.

A cost segregation study identifies and documents that split, pulls years of depreciation into the present, and puts the cash back in your hands now rather than in 2060.

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Illustrative reclassification: $1,000,000 residential rental, 20% allocated to land
Asset class	Life	Allocation
Personal property (§1245)	5 & 7 yr	$120,000
Land improvements	15 yr	$80,000
Building structure (§1250)	27.5 yr	$600,000
Accelerated into short-life classes		$200,000

Illustration only, at a 25% reclassification rate. Your result depends on property type, construction, and an actual study of your property.

Client Intake

Start with the intake form

Tell us about the property. We will come back with an estimated benefit and a fixed study fee, at no cost and with no obligation to proceed.

Your Information

First name *

Last name *

Email *

Phone

Mailing address

Entity that owns the property

How is that entity taxed?

The Property

Property address *

Property type *

Date acquired *

Date placed in service *

Purchase price or total project cost *

Improvements since purchase

Has a cost segregation study been done on this property?

Anything else we should know?

I understand that submitting this form does not create a client relationship, and that I should not include Social Security numbers, account numbers, or other sensitive information in this form.

Before you rely on anything we send back. Any figure we return from this form is a preliminary screening estimate based on what you tell us here, not the result of a full study or a review of your records. Actual results vary substantially with construction type, component quality, acquisition price allocation, and the tax law in effect on your placed-in-service date. Nothing here is tax advice, no client relationship is created by submitting this form, and no result is promised.

Fit

Where a study usually pays for itself

Cost segregation is not universal. It rewards owners who bought, built, or renovated a property with meaningful depreciable basis and the income to use a large deduction now, not every property owner. We would rather tell you on the first call that you are not a fit than take the fee anyway.

You are likely a good fit if

You bought, built, expanded, or substantially renovated a property
Depreciable basis is roughly $300,000 or more
You expect to hold the property for several more years
You have income the deduction can actually offset this year
You materially participate, qualify as a real estate professional, or the property is a short-term rental

It is probably not worth it if

You are about to sell, since recapture may erase the timing benefit
Your basis is small relative to study cost
Passive activity rules would suspend the loss indefinitely
The property is nearly fully depreciated already

Property types we study

Apartments & multifamily Single-family rentals Short-term rentals Self-storage Medical & dental offices Restaurants Retail & strip centers Industrial & warehouse Hotels Auto dealerships Office buildings

Already Own It

You do not have to amend a single return

The most common objection we hear is that the purchase was years ago.

For property placed in service in an earlier year, a retroactive study lets you claim every dollar of depreciation you should have taken. You claim all of it in the current year, through a change in accounting method on Form 3115 with a §481(a) catch-up adjustment.

No amended returns. No reopening closed years. One filing, one adjustment, one deduction.

Form 3115

Automatic consent for the method change, with no private letter ruling required.

§481(a) adjustment

The full cumulative catch-up, recognized in the year of change.

No amendments

Prior returns stay filed as filed. Closed years stay closed.

The Engagement

What actually happens

Six steps, in this order. Most studies are delivered in under a month from engagement.

STEP 1

Client intake form

Complete a short intake form and we will come back with an estimated benefit and a fixed study fee before you commit to anything.

STEP 2

Engagement letter

Fixed fee, defined scope, and a delivery date in writing.

STEP 3

Document collection

Closing statement, depreciation schedule, appraisal, blueprints, and any construction invoices.

STEP 4

Property data

Public property records and your documents build a detailed, component-level picture of the property.

STEP 5

Cost allocation & review

Costs are allocated by recovery class and reviewed for accuracy, following the IRS Cost Segregation Audit Techniques Guide.

STEP 6

Report & filing

A defensible report, the depreciation schedules, and the filing itself, because we prepare the return.

Straight Answers

What a vendor will not tell you

Is this a permanent tax saving?

Primarily it is a timing benefit. You take deductions sooner, not more of them. The value is the time value of that money, which is real and often large. There can also be a genuine rate benefit, since accelerated deductions offset income at ordinary rates while some of the gain on a later sale is taxed differently. Anyone who describes it as free money is selling something.

What happens when I sell?

Depreciation comes back. Gain attributable to §1245 personal property is recaptured as ordinary income, and unrecaptured §1250 gain on the structure is generally taxed at up to 25%. We model the exit before you engage, not after. If you plan to sell soon, we will walk you through the repercussions of that timing before you commit to a study.

Will I actually be able to use the deduction?

That is the question most vendors skip. Rental activity is passive by default under §469, so the loss may be suspended rather than usable. It becomes usable if you materially participate, qualify as a real estate professional, or the property meets the short-term rental exception. The excess business loss limitation under §461(l) can also cap the benefit. We test this before recommending a study.

Does a study increase my audit risk?

A properly documented, detailed study is a recognized and accepted method. The IRS publishes an Audit Techniques Guide describing what it expects to see. What draws scrutiny is a study built from rules of thumb with no real documentation and no component-level support. That is precisely why ours includes both.

What does a study cost?

A fixed fee quoted after you complete a client intake form, scaled to property size and complexity. We will not proceed if the projected benefit does not clearly justify the fee, and we will tell you that in the first conversation rather than the last.

Do I have to become a client to get a study?

No. We prefer to manage the study and prepare the return together, so the deduction lands correctly the first time, but we are also glad to coordinate a study on a standalone basis if another firm prepares your return. We will coordinate directly with your CPA and deliver the report and depreciation schedules they need to file it.

Next Step

Find out with one form

Complete our client intake form and we will come back with an estimated benefit and a fixed fee, at no cost and with no obligation to proceed.

Complete a Client Intake Form