Multifamily Cost Segregation

How many units do you handle — is there a minimum or maximum unit count?

There is no unit-count limit. A 5-unit building, a 20-unit property and a 500-unit portfolio are all in scope, and the same document-driven method applies to each. What varies is which product fits, not eligibility: the cost segregation study covers a property whose purchase price plus construction costs total up to $250 million, and above that the scope is agreed on a call with an advisor first. There is no hard minimum, though below roughly $500,000 of depreciable basis a study priced in the thousands of dollars often costs more than it returns — that figure is a pricing threshold, not a tax rule, and it is lower for a lower-priced report.

How much of an apartment building can be reclassified through cost segregation?

For most garden-style and mid-rise apartment buildings, the share that can be reclassified out of the 27.5-year schedule is typically 20–30% of the depreciable basis (purchase price plus construction costs, less land), moving into 5-year personal property (unit fixtures, appliances, carpet and other readily removable flooring) and 15-year land improvements (paving, fencing, landscaping, pole-mounted site lighting). High-amenity Class A properties often reach the upper end of that range due to more short-life interior finishes.

How does cost segregation work for a real estate syndication?

The partnership claims the accelerated depreciation on its return (Form 1065) and allocates it to each investor on Schedule K-1 under the partnership agreement, commonly in proportion to ownership. A partner can deduct its share of the loss only up to its basis in the partnership interest (§704(d)) and its amount at risk (§465, which counts qualified nonrecourse financing secured by real property under §465(b)(6)), and a limited partner’s interest is generally treated as passive (§469(h)(2)), so the loss offsets passive income, with any loss the passive-activity rules disallow carried forward to the next year (§469(b)); a general partner or an LLC member is passive or not depending on material participation. So, in a hypothetical illustration, not a projection for any property, a partnership with $3 million of first-year deductions allocates $300,000 to a 10% limited partner, and whether that partner can use it this year depends on those limits.

Does bonus depreciation still apply to multifamily in 2026?

Yes, in 2026, for the 5-year and 15-year property a cost segregation study reclassifies, at the rate its acquisition date allows. Bonus depreciation under IRC §168(k) is 100%, permanently, for qualified property acquired after January 19, 2025 (OBBBA, 2025-07-04), or, for self-constructed property, whose construction began after that date; qualified property acquired on or before that date stays on the TCJA phase-down (as does self-constructed property begun on or before it) by placed-in-service year: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% after that, with each rate one year later for long-production-period property and certain aircraft (§168(k)(6)(B)). For that test the acquired date is not the closing date: under IRS Notice 2026-11 property bought under a written binding contract is acquired on the latest of the date the contract was signed, the date it became enforceable under state law, the end of any cancellation period and the date any contingency was satisfied, under a contract that is not binding (for example, one that limits damages to a specified amount) it is generally when more than 10 percent of the total cost, excluding land and preliminary activities, has been paid or incurred, and self-constructed property, including property built for the taxpayer under a written binding contract signed before construction began, is acquired when physical work of a significant nature begins (Treas. Reg. §1.168(k)-2(b)(5)); and used property qualifies only if the taxpayer had not used it at any time before acquiring it and the acquisition meets the §179(d) purchase rules that §168(k)(2)(E)(i) applies (for example, it was not acquired from a related party, by gift or inheritance, or with a carryover basis).

Can cost segregation be done after purchase (look-back study)?

Yes, for a property you placed in service in an earlier tax year and still own. Under the automatic change procedures of Rev. Proc. 2015-13 and section 6.01 of Rev. Proc. 2025-23, the missed depreciation is claimed on Form 3115 with no amended returns when the property has been depreciated on two or more filed returns, or on one filed return if the taxpayer placed it in service in the tax year immediately before the year of change (the year of the return the Form 3115 is filed with), and the taxpayer still owned the property at the start of the year of change and meets the other eligibility rules. The catch-up deduction is a §481(a) adjustment on the current return; this is sometimes called a "look-back" study and can produce a large one-time deduction even on a property held for several years.

How is a multifamily cost segregation study documented?

With a component-by-component asset listing: the $15,000 study lists each component with its cost basis, recovery period and the IRS classification rationale for it, built on the methodology in the IRS Cost Segregation Audit Techniques Guide (ATG). The $15,000 cost segregation study is document-driven: it applies an engineering principles-based methodology, the cost classification approach described in the IRS Cost Segregation Audit Techniques Guide (Publication 5653), to the property's own documents and to photographs linked to the components they support, with a qualified human review of every component.

How much does a multifamily cost segregation study cost?

The $499* cost segregation workpaper covers a rental property, ordered by the owner or by a CPA or advisor for a client (*for a property whose purchase price plus construction costs total under $2.0 million). Our $15,000 study covers a property whose purchase price plus construction costs total up to $250 million; an owner whose property is under $2.0 million is offered the workpaper instead. Above $250 million in purchase price plus construction costs, the study is scoped on a call with an advisor, and if you are not sure of the figure, Howard reaches out personally.

Other providers’ published prices for multifamily and short-term rentals, each read on the provider’s own page, are compared in best cost segregation for multifamily and short-term rentals.

When are K-1s due for a partnership waiting on a cost segregation study, and can the deadline be extended?

For a calendar-year partnership, Form 1065 and the partners' Schedules K-1 are due March 15 of the following year, and Form 7004 extends the time to file them to September 15, an extension of time to file, not to pay; the cost segregation study has to be finished before the partnership files that return for its depreciation to be on the K-1s, where each partner can use its share only within the partner's basis (§704(d)), at-risk (§465) and passive-activity (§469) limits.

Is ClickDrag Finance's multifamily cost segregation study engineering-based?

In its method, yes, for the study: ClickDrag Finance's multifamily study applies an engineering principles-based methodology to your documents and photographs. The $15,000 cost segregation study is document-driven: it applies an engineering principles-based methodology, the cost classification approach described in the IRS Cost Segregation Audit Techniques Guide (Publication 5653), to the property's own documents and to photographs linked to the components they support, with a qualified human review of every component.

What audit support comes with a multifamily cost segregation study?

The audit support that comes with our $15,000 multifamily cost segregation study is the study itself. The deliverable itself is the support: the written study, with its methodology, cost sources and per-component classification rationale. For the $499* workpaper, the support is the workpaper and its stated procedures. *For a property whose purchase price plus construction costs total under $2.0 million.

On the cost segregation audit support page, the providers whose own pages state audit support as included, with the date each page was read: Which companies offer audit support with multifamily cost segregation studies?

Who offers affordable cost segregation studies for duplex owners?

ClickDrag Finance's $499* cost segregation report covers a duplex held as a rental property whose purchase price plus construction costs total under $2.0 million. The cost segregation workpaper is for rental or business property: for an owner whose property's purchase price plus construction costs total under $2.0 million, and for a CPA or tax advisor ordering for a client whose property is under $2.0 million, from the client-order form. It is a workpaper for the taxpayer's tax preparer, prepared from the information the buyer provides, reviewed before release. Other online services publish their own prices, each with its own basis or unit limits; each provider's price and limits, with the date they were read, are in our comparison of the best cost segregation companies. If you live in one of the two units, ask your tax preparer how the rented unit is treated before you order. A cost segregation study is worth it when three conditions hold together: the basis is large enough for the accelerated deductions to outweigh the cost of the study, the deduction is usable this year given the owner's passive-activity position, and the hold is long enough to survive recapture. All three, or the honest answer is no. *For a property whose purchase price plus construction costs total under $2.0 million.