Cost Segregation Study Services – the Reese CPA Firm.
Accelerate Depreciation, Increase Cash Flow, and Maximize Bonus Depreciation
A cost segregation study is one of the most powerful tax strategies available for owners of commercial real estate and income-producing residential property. Instead of depreciating an entire building over 39 years (commercial) or 27.5 years (rental residential), cost segregation reclassifies qualifying components into shorter recovery periods—commonly 5, 7, or 15 years—to accelerate depreciation deductions and improve near-term cash flow.
Best for: property owners, real estate investors, developers, and operating businesses that own buildings, leasehold improvements, or have completed renovations.
Start with a no-obligation review: We’ll estimate whether a cost segregation study is likely to produce meaningful first-year tax savings for your property.
What Is a Cost Segregation Study?
A cost segregation study uses an engineering-based property analysis to identify and document building components eligible for faster tax depreciation. The result is a detailed reclassification and depreciation schedule designed to maximize allowable deductions while supporting IRS-compliant documentation.
Why Cost Segregation Can Create Large First-Year Tax Savings
When short-life assets are identified and properly classified, taxpayers may accelerate deductions and—when eligible—layer in bonus depreciation on qualifying components (generally assets with a recovery period under 20 years).
100% Bonus Depreciation (Current Rules)
Recent federal guidance indicates 100% additional first-year depreciation is available for certain qualified property acquired and placed in service after January 19, 2025 (with transition rules and elections in some cases). We’ll confirm eligibility based on acquisition/placed-in-service timing and your facts.
Bottom line: Cost segregation + bonus depreciation can significantly increase deductions early in the ownership cycle, which can improve cash flow and reinvestment capacity.
Property Types Commonly Eligible
Most properties placed in service after 1986 may qualify, including:
- Office buildings, retail, warehouses, industrial facilities
- Multifamily (apartments), student housing, senior living, mixed-use
- Hotels, medical/dental offices, clinics, and more
Many property types can often accelerate a meaningful portion of total costs through reclassification (varies by property and improvements).
Commonly Missed Depreciation Opportunities
A strong cost segregation study often identifies overlooked components such as:
- Electrical and specialized wiring systems
- HVAC and process cooling components
- Interior improvements (removable partitions, specialty flooring/finishes)
- Site improvements (landscaping, irrigation, lighting, signage, utilities)
- Specialty systems (fire suppression, access control, AV/telecom)
Our Engineering-Based Cost Segregation Process
We follow a structured methodology designed to produce defensible results and a clear implementation roadmap:
- Engineering analysis & site/property review (documentation, component identification)
- Cost allocation (breakdown by component using cost/market data)
- Tax classification (assign recovery periods per IRS guidance; build depreciation schedules)
- Documentation & review (final report package + audit support materials)
- Results & strategic planning (savings projections, implementation roadmap, planning insights)
Typical timeline: Many studies complete in about 4–6 weeks depending on property complexity and documentation availability.
Cost Segregation FAQs
A study reviews building subcomponents (e.g., lighting, HVAC, systems) and assigns appropriate shorter lives (often 5 or 15 years) to accelerate depreciation where allowed.
Market pricing varies by property size/complexity; many studies fall in a several-thousand-dollar range.
Many owners commission studies before major rehab/renovation when possible to establish and document baselines more easily.
Ready to see if your property qualifies for a cost segregation study?
Request a Cost Segregation Eligibility Review and we’ll estimate potential accelerated depreciation, bonus depreciation opportunities, and cash-flow impact based on your property type and facts.