Frequently Asked Questions

We analyze the property and break costs into components, flooring, electrical, plumbing, site improvements, then reclassify eligible portions into shorter tax lives (typically 5-, 7-, or 15-year property). Those components depreciate faster than the building, which front-loads deductions into the early years of ownership.

What you'll typically see in a proposal:

• Estimated reclass: $X moved into shorter-life assets
• Potential bonus depreciation: $X (based on placed-in-service timing, purchase price, and any qualified improvements or capex)

As the advisor, you'll take those numbers and determine how they fit into your client's broader tax strategy.

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If the property is income-producing (rented or used in a business) and was purchased for $300,000+, there's a strong chance cost segregation can meaningfully accelerate depreciation for your client. We can confirm fit quickly with a few basic property details. Just send it our way, and we'll come back to you fast.

No. A standard depreciation analysis assigns the entire building (minus land) to one recovery period, 27.5 or 39 years. A cost segregation study goes further. It breaks the property into individual components and assigns each to the shortest defensible recovery period based on engineering analysis and IRS guidelines.

Cost segregation study software varies by firm, but most use proprietary engineering platforms combined with industry-standard cost estimating tools like RSMeans data and Marshall & Swift. These systems help engineers assign accurate replacement costs to individual building components and map them to the correct IRS asset classes. The software matters less than the engineering methodology behind it; a credible firm follows the IRS Audit Technique Guide regardless of the tools used.

Yes. Many firms now offer a fully online cost segregation study process. At R.E. Cost Seg, the entire engagement, from document submission to engineering analysis to final report delivery, can be completed remotely. Virtual inspections using photos, video walkthroughs, and satellite imagery allow engineers to classify property components without an in-person visit. Online studies are faster, more convenient, and produce IRS-compliant reports identical to traditional on-site studies.

Yes, but you don't need to limit your search to local firms. Cost segregation is a specialized engineering discipline, and the best firms work with investors nationwide. R.E. Cost Seg serves clients in all 50 states. Property inspections can be conducted through virtual site visits, so geography is rarely a limiting factor. What matters most is the firm's engineering expertise, IRS compliance track record, and turnaround time, not proximity.

Absolutely. A look-back study lets you claim all missed accelerated depreciation on properties you've owned for years, even a decade or more. Your CPA files Form 3115 (Change in Accounting Method) to catch up on the missed deductions in a single tax year. No amended returns required.

A full cost segregation report runs 30–100+ pages. It includes an asset-by-asset breakdown of every reclassified component, depreciation schedules by recovery period, the engineering methodology, and IRS compliance documentation. Your CPA uses this report to file your depreciation deductions.