Frequently Asked Questions
Browse answers about cost segregation, real estate tax strategies, and depreciation.
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Most clients see a 10–30x return on the study fee through accelerated deductions and tax deferral. A study that unlocks $40,000+ in deductions at a cost of $2,275 is a straightforward win to present.
The fee is the easy part of the conversation. The value is in what the study unlocks, and that's the story you're telling your client.
Cost segregation is a well-established, IRS-recognized strategy when performed correctly. We follow strict standards and produce defensible documentation to support every classification in the report.
Key points:
- Audit risk is typically low when the report is prepared with proper methodology and filed correctly, which is exactly what we're built to deliver.
- Our documentation is designed to stand behind your filing, not create additional exposure.
Our studies are prepared using IRS-compliant engineering and tax methodology, and the deliverables are designed to integrate cleanly into your workflow.
You'll receive a cost segregation report with full asset classifications and a depreciation schedule formatted for direct import into tax software. Everything is documented to support your filing position and to hold up under scrutiny if needed.
If you have questions about methodology or want to walk through the report before filing, our team is available to connect directly.
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.
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.