Estimate Your Savings
Use our free calculator tool to estimate your savings from a cost seg study
How Cost Segregation Works
A building isn’t just four walls and a roof. It contains many components — like carpet, cabinetry, specialty electrical, and land improvements (sidewalks, fencing) — that may qualify for shorter tax recovery periods (e.g., 5, 7, or 15 years instead of 27.5 or 39 years).
The purpose of a cost segregation study is to identify and reclassify those shorter tax life components so you can accelerate depreciation deductions and improve cash flow. Depending on the year, qualifying assets may also be eligible for bonus depreciation, which further increases your year 1 depreciation and tax savings. Check what bonus depreciation you qualify for here.
Even without bonus depreciation, simply moving items to shorter lives will increase first-year deductions compared to straight-line 27.5 or 39 year schedules.
Cost Seg Example
| Purchase price for property | $1,000,000 |
| % of purchase price allocated to land (which is non-depreciable) | 20% |
| Depreciable basis | $800,000 |
| % of depreciable basis reclassified into shorter life categories with a cost seg | ≈ 25% |
| Assets eligible for accelerated depreciation with a cost seg | ≈ $200,000 |
| Year 1 tax savings at a 37% income tax rate with a cost seg | ≈ $74,000 |
Higher depreciation → lower taxable income → improved cash flow
Note: Actual results will depend on the specific features of your property (e.g., quality of the property, condition, year of purchase, renovation work, location, etc.).
Why Choose Us
We help real asset owners navigate the complex worlds of tax credits and incentives. Our team has 20+ years of experience performing cost seg studies.
We are unique in the market by offering a full range of cost seg services, from DIY studies for single-family residential properties to fully engineered studies for more complex properties and situations (under our sister brand MVO). We focus on delivering the highest quality reports, at a price that ensures a high ROI.
FAQs
Cost Segregation is an IRS-approved tax planning strategy that can provide companies or individuals who have acquired, constructed, or renovated real estate assets with increased cash flow by accelerating the deductions from depreciation and reducing income taxes.
A cost segregation study is an engineering-based analysis of real estate assets to identify the costs of components that can be depreciated more quickly for tax purposes. Typically, real estate assets are depreciated over 27.5 or 39 years for federal and state income tax purposes. However, the tax code allows certain assets to be depreciated over 5, 7, or 15 years. These assets are also eligible for first year bonus depreciation. As much as 20% to 50% of the cost of a real estate property may be eligible. By identifying and accelerating depreciation deductions, cost segregation decreases federal and state income taxes and increases cash flow to the owner of the real estate asset. You can learn more about how cost segregation works here.
Savings vary based on property type, value, and your tax situation. Typically, our clients see first-year tax savings up to 10% of their purchase price. Our clients also typically see first-year tax savings of 5x the cost of their study. Every situation varies, but applied correctly cost seg can be a really lucrative and efficient strategy.
We are happy to provide you a personalized estimate of your benefits and costs and based on your specific situation, or feel free to use our free estimate tool.
Most income-producing properties qualify including: short term rentals, apartments, condos, office buildings, retail centers, warehouses, manufacturing facilities, hotels, and medical facilities. Properties must be used for business or income-producing purposes, not be a personal residence.
It depends on your property and your desired level of service. We are proud to offer a several options so you can choose.
Do-It-Yourself (DIY) studies, powered by our sister brand Cost Seg EZ, can be generated instantly for $595 per property. This option is available for residential properties (excluding condos) with a purchase price < $1 million and minimal post-acquisition improvements.
Engineer-Reviewed studies takes DIY and adds a detailed review by our experienced engineering team to ensure maximum benefits and accuracy for $895 per property. This option is available for all residential properties (including condos) with a purchase price < $1 million and post-acquisition improvements up to $100,000.
Fully Engineered studies are our core business. This is for larger residential properties and all commercial properties. The pricing depends on the size and scope of the project and starts at $2,250. Get a personalized proposal here.
You can learn more about our different offerings here.
Cost segregation studies do not increase your audit risk when done properly. Cost segregation is an IRS-approved strategy, and we've never had a study rejected by the IRS. Our studies follow the IRS guidelines and we lead the industry with engineering-based best practices. A poor quality or inaccurate study is what can increase the risk of an audit or cause issues during an audit.
Yes! You can still capture the benefit of cost segregation via a “look back” analysis. This process involves filing a Form 3115 with your next tax return and allows you to “catch up” on any depreciation deductions you missed by not doing the cost segregation study in year 1. This is very common.
Yes, we provide lifetime audit protection. If the IRS questions any aspect of our cost segregation study, we'll handle the defense at no additional cost to you. Our studies follow all current guidelines and we've never had a study rejected by the IRS.