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 year 1 "bonus" depreciation acceleration. So as much as 20% to 50% of the cost of your property may become year 1 depreciation. 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.

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.

The IRS has an Audit Technique Guide, where it describes the best practices for a cost segregation report that will be accepted by the IRS during an audit. The IRS explicitly states that a cost segregation expert should conduct the study and create the report, and that significant construction and engineering experience is required (See page 35).

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 quote of your benefits and costs and based on your specific situation, or feel free to use our free estimate tool.

Cost Seg EZ is a web-based tool that helps real estate investors generate cost segregation studies instantly to maximize their tax savings. Our tool is based on detailed engineering-based models that utilize industry leading construction cost data and our decades of experience performing cost seg studies to create calculations specific to your property. We have 20+ years of experience and have completed over 3,000 cost seg studies, ranging from single-family homes to billion-dollar high rise office towers. Simply input details about your property and we segregate the assets and estimate their costs to instantly generate a cost seg study. We also offer review by our experienced engineering team to maximize benefits, which typically takes 3-5 business days.

It depends on your property and your desired level of service. We are proud to offer a several options so you can choose.

DIY studies 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.

We also offer Fully Engineered studies, under our sister brand MVO Cost Seg. This is 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.

DIY cost segregation studies are available for residential properties (excluding condos) with a purchase price < $1 million and minimal post acquisition improvements.

Engineer Reviewed cost segregation studies are available for all residential properties (including condos) with a purchase price < $1 million and post acquisition improvements up to $100,000.

We also offer Fully Engineered cost segregation studies for all property types and sizes. Get a personalized proposal here.

Cost Seg EZ offers a more convenient and cost-effective alternative to traditional cost seg studies. Rather than hiring an engineer to perform a detailed analysis of your property, you can use our online tool to quickly and easily generate a cost segregation study on your own. Many firms charge based on the time and resources required to complete the study, whereas we charge a flat, affordable price, so you can be confident that you are getting a high-ROI on the tax savings you unlock. We want real investors large and small to take advantage of cost segregation.

We are dedicated to making cost segregation accessible to property owners of all sizes. This means offering a lower cost, simpler service when the situation allows.

We created Cost Seg EZ because we wanted to democratize access to cost segregation studies. It used to be that only large investors or major property owners could afford to get a cost segregation study – now an entrepreneur with 1 AirBNB can execute this powerful tax strategy. DIY studies can be lower cost because they are for simpler situations and properties.

To generate a cost segregation study with Cost Seg EZ, you will need to provide some basic information about your property. This includes the address, square footage, year built, construction quality, property condition, flooring types, kitchen cabinets and appliance details, finishes, exterior improvements, etc.

If you've done significant renovations or purchased an Engineer Reviewed study, sharing an appraisal and/or an inspection report is very helpful.

We recommend filling out the form on a computer (rather than a phone or tablet).

We have several resources to help.

Hover over the black “i” icons in the form for tips or more information.

Check out our how-to video for step-by-step guidance on the process. We also have detailed instructions and descriptions of the required inputs.

If you still have questions or need additional assistance, don't hesitate to contact us or schedule a consultation. Our team is here to help and will be happy to assist you in any way we can.

Click here to view a sample Cost Seg EZ report and see for yourself the power of our tool. Our reports are designed to include everything you need to implement your cost segregation study and maximize your tax savings.

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, we provide lifetime audit protection as an add on for an additional charge of $195 per property for our DIY and Engineer Reviewed reports. 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.

Please note that audit protection is included for free for our Fully Engineered studies. We only charge extra for this for our DIY and Engineer Reviewed studies because we need to review your inputs to ensure they are defensible with the IRS. When we analyze all of inputs that go into a study, we fully stand behind our work at no extra cost.

Audit protection must be purchased within 14 days of the completion of your cost segregation study. If you do not purchase audit support at the time of your original cost segregation study and require our support in the future, we offer our services on an hourly basis. The cost of this service will be billed at our standard hourly rates at the time the hours are incurred and is subject to the availability of our staff.

Ideally in the same tax year as your acquisition, construction, or renovation — but look-back studies (studies done years later) are very common and can still deliver very attractive tax savings. With a look-back study you do a catch-up without amending prior returns.

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.

The depreciable basis of your property is generally the purchase price, less land value (which is not depreciable for tax purposes), plus any post-purchase improvements to the property.

There are a number of ways to estimate the land value, including: an appraisal, using a ratio based on the property tax assessment, or researching vacant land sale comps. If you have questions, feel free to reach out to us.

Bonus depreciation has been in existence in many forms since 2001, ranging from 0% to 100% at various times. Determining your bonus depreciation percentage is a multi-step process.

When did you acquire your property (typically, this is the date the transaction closed)? This determines which tax law applies to your property.

• If before September 28, 2017: Please consult your qualified tax advisor or reach out to us with questions.
• If between September 28, 2017 and January 19, 2025: Please see the table below.
• If after January 19, 2025: The applicable bonus depreciation percentage is 100%.

If you acquired your property between September 28, 2017 - January 19, 2025, then the applicable bonus depreciation percentage is based on the date Placed in Service as follows:

Our estimator leverages over 20 years of experience to estimate the cost seg reclassification percentage for different property types. With this information, we apply the various depreciation schedules by tax category to provide an estimate of your year 1 and first 5 year depreciation compared to traditional straight line methodologies.