Reduce Your Income Tax Burden Through Strategic Depreciation
Cost segregation studies accelerate depreciation on your commercial property by identifying and reclassifying building components that qualify for shorter recovery periods. Our engineering-based analysis helps property owners realize significant federal tax savings and increased cash flow by correctly categorizing assets according to IRS guidelines. Within the first five years of building ownership, owners can save up to $100,000 for every $1 million in building costs.
Accelerated Depreciation
Reclassify assets from 27.5/39-year depreciation to 5-, 7-, or 15-year schedules for immediate tax savings.
Reduced Tax Liability
Lower your federal income taxes by identifying qualifying property components that can be depreciated faster.
Immediate Cash Flow
Convert future tax deductions into current cash flow that can be reinvested in your business today.
Enhanced ROI
Maximize your property investment returns through tax savings that typically range from $50,000 to $100,000 per million in building costs.
How Does the Cost Segregation Study Process Work?
1
Preliminary Analysis
Free Property Assessment
We analyze your property details and provide a complimentary estimate of potential tax savings based on your building’s specifics.
2
Engineering Study
Detailed Engineering Analysis
Our engineers conduct an on-site inspection and review 150+ building components to identify all opportunities for accelerated depreciation.
3
Implementation
Tax Savings Delivered
You receive a detailed engineering report documenting all reclassified assets, enabling immediate tax reduction and increased cash flow.
Actual Cost Savings by Cost Segregation Engineering-Based Studies
| Facility Type | Total Property Cost | First Year Cash Flow from Tax Savings | Five Year Cash Flow from Tax Savings |
|---|---|---|---|
| Short-Term Rental | $480K | $12,783 | $31,229 |
| Self-Storage Facility | $1.40M | $53,751 | $131,569 |
| Restaurant | $2.68M | $71,374 | $173,503 |
| Warehouse | $6.37M | $108,488 | $248,559 |
| Medical Facility | $8.90M | $151,576 | $347,281 |
| Multi-Family Apartments | $15.1M | $236,763 | $570,288 |
| Retail Strip Center | $22.3M | $379,793 | $848,160 |
FAQs
Find Answers to Frequently Asked Questions
About CSSI’s Products and Services
What is the benefit of a cost segregation study?
A Cost Segregation study reduces a building owner’s income taxes up to $100,000 for every $1 mill in building costs. The tax savings are anywhere from 3-10% of the building cost.
What is a cost segregation study?
A cost segregation study is an engineering-based analysis that reclassifies commercial real estate components and improvements between real and personal property. This reclassification accelerates the depreciable lives from 27.5- or 39-years to 5-, 7-, or 15-years.
What real estate components can typically be accelerated through a cost segregation study?
A cost segregation study can typically accelerate depreciation on many building components, including:
- Electrical installations (e.g., dedicated computer power, special lighting)
- Plumbing systems (e.g., kitchen plumbing, bathroom fixtures)
- HVAC components
- Flooring (e.g., carpet, vinyl, tile)
- Window treatments
- Cabinetry and countertops
- Decorative finishes and millwork
- Security systems
- Fire protection systems
- Parking lot paving and lighting
- Landscaping and site improvements
- Certain building exterior components
Does my property qualify for a cost segregation study?
Your property likely qualifies if:
- It’s a commercial building or building improvements with a remaining depreciable basis
- The building or improvement cost basis is at least $200,000
- You anticipate holding the property for at least three years
When should a cost segregation study be done?
A study can be completed in the year the building or improvements are placed in service. However, it can also be done on properties acquired or constructed since 1986 without amending prior years’ tax returns.
How long does a cost segregation study take?
A cost segregation study typically takes approximately three to six weeks from the time we receive all the appropriate documentation.
What information is needed to complete a cost segregation study?
Generally, we request:
- A current tax depreciation schedule
- Building cost information
- Blueprints or architectural drawings and renovation plans, if applicable
- Access to the property for an on-site inspection and walk-through
How much can I save with a cost segregation study?
Savings vary, but within the first five years of building ownership, owners could save up to $100,000 for every $1 million in building costs.
Will a cost segregation study trigger an audit?
No, a properly conducted cost segregation study has never triggered an audit. In fact, if you are audited for any reason and the study comes into question, CSSI will defend the audit at no cost.
Can a cost segregation study be done on buildings not yet constructed?
While a full study can’t be done on unconstructed buildings, CSSI can provide estimates on tax savings from your construction budgets. A full study will be delivered when construction is complete.