Frequently Asked Questions

Cost segregation is an engineering-based tax analysis that breaks a building into components with shorter tax lives (5, 7, or 15 years) instead of lumping everything into 27.5/39 years. You don’t change total depreciation – you front-load it, improving near-term cash flow. Results are delivered in an itemized schedule your CPA books immediately.

We separate land (not depreciable) from improvements, identify qualifying personal property and land improvements, and reclassify them to shorter MACRS lives. Depreciation conventions and the applicable bonus rate are applied, producing larger first-year deductions and an audit-ready report.

Nearly all income-producing real estate: rentals (SFR/MF), office/medical, retail/fuel/car wash, industrial/warehouse, hospitality, self-storage, and mixed-use.

Ideally the placed-in-service year – but you can still benefit retroactively (see #5).

Yes. The IRS allows a Form 3115 to take a one-time §481(a) catch-up deduction for prior-year properties – often creating a large current-year benefit without amending old returns.

It varies by asset and cost, but moving ~20–40% of depreciable basis into 5/7/15-year classes is common – often producing six- or seven-figure first-year deductions on larger assets.

No. But land improvements (paving, curbs, site lighting, fencing, utilities, landscaping) typically qualify for 15-year.

Yes. Capital improvements can be segregated; certain interior, non-structural work in non-residential buildings may be QIP (15-year) and bonus-eligible (subject to rules for that year).

Bonus is an additional first-year deduction for eligible 5/7/15-year property. Cost seg identifies those assets so you can apply the current bonus percentage for that placed-in-service year.

Not when done properly. Our studies follow established IRS guidance and include photos, quantities, asset mappings, and citations – the level of documentation agents expect.

Sometimes. If you (or a spouse) qualify as a real estate professional or materially participate in certain STRs, losses may offset non-passive income. Your CPA will apply passive-loss/at-risk rules.

Accelerated items treated as §1245 can be recaptured as ordinary income to the extent of depreciation; the rest is §1250/unrecaptured §1250. Even with recapture, the time-value and bonus acceleration typically net positive – especially with longer holds.

After a 1031, the replacement property usually merits its own study. In inheritance, the step-up resets basis and a fresh study can capture new acceleration.

Closing statement (HUD/ALTA), any depreciation schedule, construction/capex detail (if available), and a site contact for a virtual or on-site review.

Yes – virtual for simpler assets; on-site for larger/complex properties. It strengthens documentation.

Typically 3–6 weeks, depending on complexity and how quickly we receive info.

Most projects fall in the $3,000–$10,000 range; complex/large assets are higher, but fees are usually a small fraction of the tax benefits.

When you remodel, PAD lets you write off the remaining basis of components you remove (e.g., old roof/HVAC). Our asset detail makes PAD elections straightforward.

A CPA-ready package: engineering report, photos, methodology, asset classes, and importable depreciation schedules. For retroactive work, we prepare 3115/§481(a) workpapers so your CPA can file efficiently.

Yes. We coordinate directly with your advisor and complete studies nationwide.