Benefits of a Cost Segregation Study
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 $30,000 to $80,000 in tax savings for every $1 million in building value.
Free Up Immediate Cash Flow
Access your depreciation benefits sooner rather than later, providing additional working capital that can be reinvested in your business, used for property improvements, or help fund your next real estate investment.
Maximize Income Tax Benefits
Lower your tax liability by reclassifying qualifying components like specialty lighting, carpet, cabinets, security systems, parking lots and landscaping from 27.5-Year or 39-year property to 5, 7, or 15-year property.
Unlock Prior Year Bonus Depreciation
While properties purchased in 2025 offer 40% bonus depreciation on current improvements, you can still claim higher rates retroactively – 100% for 2018-2022 properties, 80% for 2023, and 60% for 2024 – without amending past returns.
Strategic Tax Planning Tool
Use the detailed analysis to make informed decisions about property improvements, renovations, and future investments while maximizing available tax benefits.
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Who Qualifies for Cost Segregation?
Eligibility
A cost segregation study can benefit property owners with buildings or improvements placed in service after 1986 that have a remaining depreciable basis. Properties should have a cost basis of at least $200,000. The study works for both newly constructed buildings and properties owned for many years.
Commercial Property Owners
Owners of multi-family buildings, offices, retail centers, medical facilities, and other commercial properties can benefit from accelerated depreciation.
Residential Rental Owners
Owners of Airbnb properties, vacation rentals, short-term, and long-term rental properties can accelerate depreciation for significant tax savings.
Recent Property Investors
Investors who purchased, constructed or made improvements since 2018 can take advantage of bonus depreciation rates up to 100%
Property Portfolio Holders
Owners of multiple properties can apply cost segregation across their portfolio to maximize tax benefits and improve cash flow.
Properties That Benefit from Cost Segregation
Cost segregation studies deliver substantial tax savings across multiple property types by identifying building components eligible for accelerated depreciation.
Multi-Family Properties & Apartment Buildings
Short-Term Rentals & Airbnb Properties
Office Buildings
Retail Centers & Shopping Malls
Medical & Dental Facilities
Warehouses & Industrial Buildings
Self-Storage Facilities
Other Commercial Properties (Hotels, RV Parks, Auto Dealerships, and more)
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.