Without Cost Segregation
The entire building is generally depreciated over 27.5 years for residential rental property or 39 years for commercial property.
Cost Segregation
Accelerated depreciation on commercial and residential property.
Cost segregation studies help property owners reclassify building components to shorter depreciation schedules, generating front-loaded deductions and freeing up cash now.
For qualifying properties, accelerated depreciation can reduce taxable income and improve year-one cash flow.
$50K - $250K+
Average first-year benefit per property study
Accelerated Depreciation
Turn long depreciation schedules into near-term tax savings.
Without a cost segregation study, an entire building is typically depreciated over 27.5 or 39 years. With a study, eligible components can be reclassified into shorter asset lives.
Specialized engineers analyze the property and identify components that may qualify for accelerated depreciation treatment.
What cost segregation can deliver:
- Accelerate depreciation on 5-, 7-, and 15-year assets
- Bonus depreciation opportunities may be available
- Lookback studies on previously owned properties
- Works for commercial properties and residential rentals
- May pair with 179D energy deductions where applicable
Standard vs. accelerated depreciation.
A study identifies property components that may be depreciated faster than the building structure itself.
5-Year Assets
Examples may include carpeting, certain fixtures, decorative elements, and other qualifying personal property components.
7-Year Assets
Some specialized equipment or property components may qualify for shorter depreciation treatment after review.
15-Year Assets
Land improvements, landscaping, and certain site-related improvements may qualify for accelerated treatment.
From Study to Tax Savings
A specialist-led path from property review to filing support.
The process starts with a property review and moves through document collection, engineering analysis, and delivery of an IRS-defensible cost segregation report.
Request a Property ReviewProcess overview:
- Free property review of property type, basis, and depreciation history.
- Engagement and document collection, including closing documents, depreciation schedules, blueprints, and capital improvement records.
- Engineering-based study to walk and analyze the property.
- Component reclassification into appropriate depreciation buckets.
- Delivery of a full cost segregation report for CPA filing support.
- Cash-flow benefit realized through accelerated depreciation and potential bonus depreciation.
Who should take a closer look?
Cost segregation may be useful for owners of commercial real estate, residential rental property, newly acquired buildings, renovated properties, or properties with substantial improvements.
Lookback studies may also help property owners capture deductions that were available in prior years but not claimed.
Common review points:
- Property type and purchase date
- Building basis and depreciation history
- Capital improvements or renovations
- Current ownership and tax position
- Potential first-year benefit estimate
Common questions.
Is cost segregation worth it for smaller properties?
It depends on the property basis, improvements, and tax position. A property review can estimate whether the benefit justifies a study.
Does this just defer taxes?
Cost segregation accelerates deductions, which may create near-term cash-flow value. Your CPA can help evaluate the long-term tax impact.
Is it too late with bonus depreciation phasing down?
Bonus depreciation rules change over time, but accelerated depreciation and lookback opportunities may still create value.
What property types do not qualify?
Eligibility depends on facts and documentation. Land itself is not depreciable, and some properties may not produce enough benefit to justify a study.
How much does this cost upfront?
The review starts with evaluating the property and potential benefit before deciding whether a full study makes sense.
Will this trigger an IRS audit?
A properly prepared engineering-based study is designed to be IRS-defensible and provide supporting documentation if questions arise.
See what your property may qualify for.
Start with a property review to estimate potential first-year benefit and determine whether a cost segregation study makes sense.