Cost Segregation Study: Accelerate Depreciation and Keep More of What Your Property Earns

Most real estate investors depreciate their properties over 27.5 or 39 years. A cost segregation study reclassifies components into shorter schedules — generating large, front-loaded deductions that reduce your tax bill now, not decades from now.

Get a Cost Segregation Now!

In partnership with

20–40%

of property cost typically reclassified

Year 1

deductions — not spread over decades

Look-Back

studies available for properties you already own

What Is a Cost Segregation Study?

When you purchase or construct a building, the IRS treats the entire structure as a single asset depreciated over 27.5 years (residential rental) or 39 years (commercial). A cost segregation study disaggregates that asset.

An engineering analysis identifies components that qualify for 5-, 7-, or 15-year depreciation — things like flooring, lighting, electrical systems, landscaping, parking lots, and specialty equipment. Those components are reclassified, allowing you to deduct their cost in a fraction of the original timeline.

Combined with bonus depreciation, many investors can deduct 60–100% of the reclassified cost in the year of purchase — turning a property acquisition into a significant tax event.

Depreciation Schedule: Before vs. After

Without Cost Segregation 27.5 / 39 yrs

~3.6% deducted per year on a straight-line basis

With Cost Segregation (5–15 yr assets) Year 1

Up to 60–100% of reclassified assets deducted in Year 1 with bonus depreciation

Who Benefits Most

Cost segregation works best in specific scenarios. Here is where we see the strongest ROI.

Residential Rental Investors

Multi-family, short-term rentals, and single-family portfolios with a cost basis above $500K benefit significantly from reclassifying fixtures, flooring, and systems.

Commercial Property Owners

Office, retail, industrial, and mixed-use properties typically have 20–40% of their cost basis eligible for reclassification, making them prime candidates.

Recent Purchasers or Builders

The best time to conduct a study is within the first year of ownership or construction. Bonus depreciation rates are highest at acquisition.

Long-Time Property Owners

A look-back study lets you reclassify assets on properties held for years and claim a catch-up deduction in a single year — without amending prior returns.

After Major Renovations

Significant capital improvements — roofing, HVAC, electrical, interior build-outs — can be reclassified post-renovation to unlock additional accelerated deductions.

Real Estate Professionals (REPS)

Investors who qualify as Real Estate Professionals can use accelerated losses to offset ordinary W-2 or business income — dramatically amplifying the tax benefit.

How We Coordinate Your Study

We work with qualified cost segregation engineers on your behalf and integrate the results directly into your tax strategy.

Review Your Properties

Our team reviews your property details, purchase price, existing depreciation schedule, and tax situation to assess whether a study makes financial sense for you.

Coordinate the Study

We connect you with a qualified cost segregation engineer who conducts the property analysis and produces a defensible, IRS-compliant report.

Integrate Into Your Return

The reclassified asset schedule is applied to your tax return. We ensure bonus depreciation is maximised and the deductions are positioned correctly across your full tax picture.

Plan Forward

We model the multi-year impact, review how recapture works at disposition, and incorporate the study into your ongoing tax strategy — not just a one-time filing.

Frequently Asked Questions

A cost segregation study is an engineering-based tax analysis that reclassifies components of a real property from 27.5-year or 39-year depreciation schedules to shorter 5-, 7-, or 15-year schedules. This accelerates depreciation deductions, reducing taxable income in the near term and improving cash flow.

Savings vary based on property type, cost, and your tax situation. On a $1M commercial property, it is common to accelerate $150,000–$300,000 in depreciation into the first few years. Combined with bonus depreciation, some investors see six-figure tax reductions in the year of purchase.

Residential rental properties (5+ units), commercial buildings, office space, retail, industrial, mixed-use, hotels, and properties that have undergone significant renovation. Generally any property with a cost basis above $500,000 sees the strongest ROI from a study.

Yes. A look-back study allows you to reclassify assets on properties you have owned for years and claim a catch-up deduction in a single year — without amending prior returns. This is one of the most powerful retroactive tax strategies available to real estate investors.

No, but your ability to use the losses depends on your tax status. Real Estate Professionals (REPS) can use passive losses against ordinary income. Other investors can use losses to offset passive income or carry them forward. We review your eligibility as part of the planning process.

Find Out If Your Property Qualifies

Book a free consultation with our team to review your property portfolio, model the potential savings, and determine whether a cost segregation study makes sense for your situation.