How it works
Your building is not one asset.
The IRS knows it.
Cost segregation splits a property into its components and depreciates each on its correct IRS timeline — 5 and 15 years for qualifying items instead of 27.5 or 39 for everything. Typically 20–40% of the depreciable basis moves into short-life property, and with §168(k) bonus depreciation much of it deducts in Year 1.
Deductions you were always entitled to — arriving decades early.
Get my free estimate60-second questions · personalized estimate · no credit card
The process — five steps, days not months
Traditional engineering firms schedule site walks and deliver in 6–12 weeks for $10,000–$70,000. A document-driven study gets to the same defensible answer from the records your project already produced.
Step 1
Free estimate — 2 minutes, no commitment
Answer a few questions about the property and see your estimated Year 1 deduction range immediately. The number is yours to keep — no credit card, no sales call required.
Step 2
Upload your documents
Construction pay applications (AIA G702/G703), trial balance, closing statement, and photos. The trial balance is treated as the authoritative source for your basis — no site visit needed.
Step 3
Engineering-grade analysis
Every line item is classified into its IRS recovery period (5, 15, 27.5, or 39 years) against the IRS Audit Techniques Guide, with §168(k) bonus depreciation applied under the correct rules for your placed-in-service date. Every dollar traces to a source document.
Step 4
Fully documented deliverables
A full narrative report plus an Excel workbook with exhibits and year-by-year depreciation schedules. Buckets reconcile to your depreciable basis to the penny — the standard an examiner expects.
Step 5
CPA handoff and support
Your depreciation schedule exports in a fixed-asset import format matched to your accounting software, and your CPA gets what they need to file. Questions after delivery are part of the service, not an upsell.
Who cost segregation is for — and who it isn't
A strong fit
- Commercial buildings — office, retail, industrial, medical
- Self-storage facilities (≈40% of basis typically reclassifies)
- Multifamily and apartment communities
- Single-family rental / build-to-rent portfolios
- Short-term rentals used to offset active income
- Opportunity Zone projects capturing bonus depreciation inside the QOF hold
- Properties owned for years — via a look-back study (Form 3115)
Probably not worth it
- Your primary residence (not depreciable property)
- Properties you plan to sell within a year or two (recapture can offset the benefit)
- Owners with no tax liability the deduction can offset — timing may matter more than size
Honest answer up front beats a study you didn't need. The 2-minute qualifier tells you which side you're on.
What it's worth — from real studies
Reclassification rates from studies delivered on this platform — not industry averages.
≈40%
of basis reclassified — self-storage facilities
≈16%
of basis reclassified — SFR build-to-rent communities
Year 1
is when most of it deducts, via §168(k) bonus depreciation
Want the arithmetic on your own numbers? Run the calculator or read the worked example: a $14M study, line by line.
Common questions
What is a cost segregation study?
A cost segregation study is an engineering-based analysis that separates a building into its components and assigns each one its correct IRS recovery period. Instead of depreciating the entire purchase over 27.5 or 39 years, items like flooring, cabinetry, site utilities, and land improvements are reclassified into 5- and 15-year property — pulling deductions forward into the early years you own the building, when cash flow matters most.
Do I need a site visit for a cost segregation study?
Not with a document-driven study. Construction pay applications, trial balances, closing statements, and time- and geo-stamped photos document the same components a site walk would. Every dollar in the study traces to a source document, which is what an IRS examiner actually asks to see.
I have owned my property for years — is it too late?
No. A look-back study lets you claim every year of missed accelerated depreciation at once, on your current-year return, using an automatic accounting-method change (Form 3115). No amended returns are required, and the catch-up deduction arrives in a single tax year.
How much of my building typically reclassifies?
It depends heavily on property type. In our studies, self-storage facilities reclassify around 40% of depreciable basis into short-life property, while single-family build-to-rent communities land around 16%. Most commercial and multifamily properties fall between 20% and 40%.
Will a cost segregation study trigger an audit?
Cost segregation is an IRS-recognized method with its own IRS Audit Techniques Guide. What matters is defensibility: component-level detail, source-document traceability, and schedules that reconcile to your basis exactly. A study built to that standard is designed to be examined, not hidden.
How long does a study take?
Days, not months. Because the analysis is driven by your documents rather than scheduling engineers on site, a complete study — narrative report, exhibits, and depreciation schedules — is typically delivered within days of your document upload.
See your number first. Decide second.
Two minutes of questions, an estimated Year 1 deduction range up front, and a no-obligation next step.
Get my free estimateEducational content, not tax advice. Estimates are illustrative; consult a qualified tax professional before making tax decisions.