Cost segregation, answered.

A cost segregation study is an engineering-based analysis that reclassifies components of a building from 39-year (commercial) or 27.5-year (residential rental) real property into 5-, 7-, and 15-year MACRS class lives. The reclassification accelerates depreciation deductions, reducing current-year federal taxable income.

Typical commercial properties reclassify 20–35% of cost basis. Combined with 100% bonus depreciation under OBBBA, that produces first-year deductions of 6–12% of purchase price. Net present value of the tax savings commonly ranges from 5% to 12% of acquisition cost.

Yes. The IRS publishes the Cost Segregation Audit Techniques Guide describing the methodology, and the U.S. Tax Court has consistently upheld engineering-based studies. A defensible study with proper workpapers does not increase audit risk.

Any depreciable real estate — residential rentals (27.5-year), commercial buildings (39-year), agricultural property, and improvements. The economics typically work on properties with a depreciable basis above $200,000–$500,000 depending on type.

TDA pricing depends on property type, basis, and complexity. Residential studies start from $650 and commercial studies start from $1,250. The free feasibility analysis tells you the projected savings before you commit to a fee.

For most properties, the first-year tax savings from a cost segregation study is 10×–50× the cost of the study itself. The free feasibility analysis sizes the benefit before you spend a dollar.

Fixed fee — quoted upfront based on property type, size, and complexity. We don't bill hourly. We don't take a contingency on tax savings (that's a red flag the IRS specifically warns about).

Yes. The One Big Beautiful Bill Act (OBBBA) restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. See the full guide.

Bonus depreciation applies at the rate in effect that year (60% for 2024, 80% for 2023, 100% for 2017–2022). Property acquired before January 20, 2025 and placed in service during 2025 qualifies for 40% bonus depreciation.

5- and 15-year property is subject to §1245 recapture at ordinary rates if sold at a gain on those components. The time-value-of-money benefit of accelerating deductions almost always outweighs eventual recapture, especially with 1031 exchange, installment sale, or long-term hold strategies.

Depends on your tax status. Real estate professionals (§469(c)(7)) and short-term rental hosts with material participation can deduct losses against active income. Passive landlords use the loss to offset other passive income or carry forward to future years. More on the STR strategy.

Residential studies are delivered in 5–7 days and commercial studies in 10 days from engagement. Rush turnaround available for year-end or transaction deadlines.

Yes. We deliver everything your CPA needs — asset detail by MACRS class and depreciation schedule. Many of our engagements come from CPA referrals; we never replace the CPA relationship.

Yes — and it's often most powerful with a 1031. Bonus depreciation deductions reduce current-year tax; the recapture risk is deferred via the like-kind exchange. Coordination with your QI is recommended.