Accelerate Property Depreciation with Cost Segregation
Cost segregation is a tax strategy that helps property owners pay less tax sooner. It works by identifying parts of your building—like lighting, flooring, and parking lots—that can be depreciated faster than the standard 27.5 or 39 years. Our engineering studies typically save owners $30,000-$80,000 in taxes per $1 million in building value within the first five years.
Reduce Income Tax Liability
Our engineers identify qualifying components that may represent 20-40% of your building’s value, creating significantly larger tax deductions in the early years of ownership and potentially reducing your income tax liability by thousands of dollars annually.
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.
Save Even More with Bonus Depreciation
Take advantage of immediate write-offs for qualifying property components. Recent purchases qualify for higher bonus rates (100% for 2018-2022, 80% for 2023, 60% for 2024, 100% for 2025), dramatically accelerating your tax savings without amended returns.
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Who Qualifies for Cost Segregation?
Eligibility
A commercial 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.
CRE 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 analysis 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
Retail Centers & Shopping Malls
Medical & Dental Facilities
Self-Storage Facilities
Office Buildings
Warehouses & Industrial Buildings
Short-Term Rentals & Airbnb Properties
Other Commercial Properties (Hotels, RV Parks, Auto Dealerships, and more)
How Does the Cost Segregation Study Process Work?
Our streamlined three-step process makes accessing your tax benefits simple and efficient.
No-Cost Preliminary Analysis
We analyze your property details and provide a complimentary estimate of potential tax savings based on your building’s specifics.
Detailed Engineering Analysis
Our engineers conduct an on-site inspection and review 150+ building components to identify all opportunities for accelerated depreciation, including flooring, lighting, electrical, plumbing, cabinetry, landscaping, and parking lots.
Tax Savings Delivered
You receive a detailed engineering report documenting all reclassified assets. We work directly with your CPA or tax professional to ensure proper implementation, enabling immediate tax reduction and increased cash flow.
Estimate Your Savings
Our Cost Segregation Calculator helps commercial property owners understand the potential tax benefits of accelerated depreciation. By reclassifying building components from 27.5 or 39-year property to 5, 7, or 15-year property, you can significantly increase cash flow through larger immediate tax deductions.
Simply enter your property information below to receive an estimate of potential tax savings. This calculation provides a general overview – for a detailed analysis of your specific property, our engineering-based study would identify all qualifying components.
Please note that actual results may vary based on your property’s unique characteristics, acquisition date, and tax situation. The calculator assumes current tax laws and does not constitute tax advice.
Estimated Tax Savings
Accelerated Depreciation Deduction
Standard Straight-Line Depreciation Deduction
Accelerated Depreciation Deduction
Standard Straight-Line Depreciation Deduction
Your results show estimated first-year tax savings based on typical properties similar to yours. The Conservative Estimate shows what most property owners like you can expect at minimum, while the High-End Estimate shows what’s possible with a thorough professional analysis. These numbers represent actual cash you could save on taxes. For a personalized assessment that accounts for your property’s specific features, continue with our no-cost analysis request.
Tax Savings Analysis
Cost Segregation Insights & Case Studies
Frequently Asked Questions
What is the benefit of a Cost Segregation Study?
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?
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?
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?
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?
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?
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?
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.
How much does a cost segregation study cost
The cost of a cost segregation study typically depends on the size, type, and complexity of the property. For most commercial properties, the fee generally ranges from $5,000 to $15,000. However, larger or more complex buildings, such as manufacturing plants, medical facilities, or multi-use commercial spaces may cost more due to the additional time and analysis required. Residential rental properties or smaller office spaces may fall on the lower end of the range.
That said, the true value of a cost segregation study lies in the tax savings it unlocks. Property owners often see tens or even hundreds of thousands of dollars in accelerated depreciation benefits, far outweighing the initial cost of the study.
Firms like CSSI provide tailored cost segregation studies for property owners across the U.S., focusing on maximizing ROI and ensuring IRS-compliant documentation. With experience across various industries and property types, CSSI helps businesses reduce their taxable income and improve cash flow, making the study a smart financial move.
How does cost segregation work
Cost segregation works by identifying and reclassifying certain components of a commercial or income-producing property into shorter depreciation categories. Instead of depreciating the entire building over 27.5 or 39 years, cost segregation separates qualifying assets such as flooring, lighting, cabinetry, and landscaping into 5, 7, or 15-year categories. This allows property owners to accelerate depreciation and reduce taxable income in the earlier years of ownership.
The process begins with a detailed engineering-based analysis of the property. Experts evaluate construction costs, building plans, and asset details to determine which components can be depreciated faster under IRS guidelines. The result is a cost segregation report that can be used during tax filing to support accelerated depreciation claims.
Working with an experienced firm like CSSI helps ensure accuracy, compliance, and maximum benefit. CSSI handles the entire process from document review to final report, helping property owners unlock significant tax savings and improve cash flow.
This strategy is especially beneficial for newly acquired, constructed, or renovated properties, and often pays for itself within the first year through tax savings.
Is cost segregation worth it
Yes, cost segregation is often well worth it, especially for commercial and rental property owners looking to improve cash flow and reduce tax liability. By accelerating depreciation on specific building components, property owners can significantly lower their taxable income in the early years of ownership. This can result in tens or even hundreds of thousands of dollars in immediate tax savings, depending on the property’s size and value.
Cost segregation is particularly beneficial for properties acquired, constructed, or renovated after 1987 and with a value of at least $150,000. The savings typically outweigh the cost of the study, often delivering a full return on investment within the first year through reduced tax payments.
Partnering with an experienced firm like CSSI ensures the study is done accurately, in compliance with IRS guidelines, and tailored to your property type. CSSI has worked with thousands of property owners across industries, helping them realize long-term financial benefits.
Can i do my own cost segregation study
Yes, you can attempt to perform your own cost segregation study, but it is not recommended unless you have the expertise in engineering, tax law, and construction cost estimation. A proper cost segregation study involves a detailed analysis of building components, IRS classification rules, and accurate allocation of costs to shorter depreciation categories like 5, 7, or 15 years.
The IRS prefers engineering-based studies conducted by qualified professionals. A poorly executed DIY study may lack proper documentation or fail to comply with IRS standards, which could lead to audit risks, penalties, or disallowed deductions.
That’s why most property owners choose to work with experienced providers like CSSI. Our team includes engineers and tax specialists who deliver IRS-compliant studies that maximize your tax benefits while minimizing risk. We handle everything from property evaluation to final reporting, so you don’t have to navigate complex rules on your own.
If you want to unlock significant tax savings while staying compliant, it’s best to leave the study to professionals with a proven track record.
