COST SEGREGATION
Unlock Hidden Tax Savings & Increase Cash Flow
Understanding Cost Segregation
Under United States tax laws and accounting rules, cost segregation is the process of identifying personal property (1245) assets that are grouped with real property assets (1250) and separating them out for tax reporting purposes—utilizing the permanency rulings established by the IRS and U.S. Tax Court. Through a combined engineering and accounting process, a cost segregation study reclassifies personal property assets to shorten depreciation periods. This strategy reduces current income tax obligations and improves cash flow.
Personal property assets may include non-structural building elements, exterior land improvements, and indirect construction costs that are not permanent in nature under IRS rules.
The primary goal of a cost segregation study is to identify all construction-related costs that can be depreciated over a shorter tax life (typically 5, 7, or 15 years) rather than the traditional 27.5 or 39 years. This IRS-recognized strategy accelerates depreciation, creates larger deductions in the early years of ownership, and ultimately frees up cash for reinvestment and growth.
Additional Benefits
Additional Benefits
Beyond accelerated depreciation and improved cash flow, a Cost Segregation Study can support lower assessed values in some jurisdictions, sharpen insurance valuations, and strengthen risk management—often reducing total insurance spend and improving negotiating leverage.
Highlights: property tax appeal support, precise replacement-cost estimates, proactive maintenance planning, and flexible coverage options tailored to asset lifecycles.
Our Process
1. Document Review: Analyze construction costs, architectural drawings, and records.
2. Site Inspection: Identify qualifying assets.
3. Asset Reclassification: Assign assets into 5-, 7-, or 15-year categories.
4. Audit-Ready Report: Executive Summary, Final Report, and Form 3115.
Eligibility
Cost Segregation is most effective for properties valued above
$200,000 and placed in service after 1986.
🔵 Residential & Commercial
🔵 New Builds & Renovations
🔵 Acquisitions & Expansions
🔵 Older Properties with IRS Adjustments
how to proceed
The IRS expects engineering-based studies. Work with experienced professionals to ensure compliance and audit readiness.
Step 1: Schedule a consultation
Begin with a no-cost consultation. We review your property type, project scope, and financial goals to confirm eligibility and potential benefits.
Step 2: Provide documentation
Submit available construction costs, architectural drawings, or fixed asset schedules. Even limited records can be used to build a compliant analysis.
Step 3: On-site review
Our specialists walk the property (or use digital documentation if needed) to identify qualifying assets, improvements, and overlooked deductions.
Step 4: Deliver final report
You receive an engineered, audit-ready report with asset reclassifications, depreciation schedules, and IRS documentation for filing.
