Put your building's depreciation to work this year.
An engineering-based study moves parts of your building off the 27.5 or 39 year schedule and onto 5, 7, and 15 year schedules. You keep the same deductions. You just take them when they're worth the most.
What a cost segregation study actually does
Engineers and tax professionals walk through the building and separate it into what it really is. Carpet, cabinetry, dedicated electrical, equipment plumbing, parking, landscaping, and exterior lighting were never 39 year property. They were booked that way because nobody separated them out.
Once reclassified, those components depreciate over 5, 7, or 15 years, and under current bonus depreciation rules they can often be deducted in the first year. That lowers taxable income now and frees up cash to reinvest, pay down debt, or distribute.
Studies usually follow a purchase, construction, or major renovation. They also work on buildings you've owned for years, through Form 3115, without amending a return.
See how much you qualify for
Three inputs: building cost, property type, and tax rate. The result is an estimate. The real number comes from the engineering study.
Land is not depreciable. If you only know the purchase price, a typical commercial split is 70 to 80 percent building. Enter the building portion.
21 percent for C corporations. 24 to 37 percent federal marginal rates for pass-through owners.
Estimated year-one cash tax savings
- Reclassified to 5, 7, and 15 years
- $0
- Year-one deduction with a study
- $0
- Year-one deduction on the default schedule
- $0
- Additional deductions in year one
- $0
$0 eligibility review. If a study makes sense, a flat fee quoted up front before any work begins.
Assumptions: 100 percent federal bonus depreciation for qualifying property acquired after January 19, 2025 (earlier acquisitions may use lower bonus rates; look-back studies still capture value through Form 3115). Typical reclassification percentages by property type. Default schedule modeled as 39-year straight line with first-year conventions simplified. Excludes state conformity, recapture at sale, passive-loss limits, NIIT, and AMT. An illustration, not tax advice and not a guaranteed outcome.
Why owners and their CPAs do this
Deductions moved forward
Components reclassified to 5, 7, and 15 year property front-load depreciation into the years you own the building.
Catch-up on older buildings
Already in service? Form 3115 claims the missed depreciation on this year's return.
Pairs with bonus depreciation
Reclassified components can qualify for 100 percent bonus depreciation on property acquired after January 19, 2025.
Cash you can use now
Lower tax this year means capital for the next property, the loan balance, or distributions.
Engineering, not a spreadsheet
Components are identified and costed by engineers, following the IRS Cost Segregation Audit Techniques Guide.
Built for your CPA
The finished report goes straight to your accountant, with Form 3115 support when it's needed.
Who benefits most
- You own commercial, multifamily, or investment real estate
- The building was bought, built, or renovated for $500K or more
- You have taxable income to absorb the deductions, or will. Excess carries forward.
- No study has been done on the property, or a renovation came after the last one
From your first call to a CPA-ready report
Free eligibility review
Share the address, purchase date, cost basis, and renovation history. You get a preliminary estimate before you commit to anything.
Flat-fee quote
If the numbers work, you get one flat fee, quoted up front. No percentage of your savings.
Engineering study
Engineers inspect the property, catalog components and systems, and allocate cost to each recovery period. Typically two to four weeks.
Report to your CPA
Your accountant receives a complete report, with Form 3115 support if the building is already in service.
Real studies, real numbers
Completed by the licensed engineers and CPAs we work with.
Appliances, furniture, fixtures, and improvements reclassified in the first year of ownership.
$120K additional year-one depreciation. $48K additional cash flow in year one.
Owner-occupied and on the 39 year schedule for several years. Structure, electrical, HVAC, and process equipment reviewed.
Every missed year captured in one year through Form 3115. No amended returns.
Plumbing, HVAC, parking infrastructure, cabinetry, and specialty fixtures moved to 5, 7, and 15 year schedules.
Deductions funded reinvestment in the property. All positions upheld through IRS examination.
Representative photos from Pexels (Max Vakhtbovych, Mazhar Ulazhar, Grbr Snts). Not the actual properties.
Common questions
What is a cost segregation study?
An engineering-based analysis that identifies building components that qualify for shorter depreciation lives than the building itself, then documents the cost of each one for your tax return.
We've owned the building for years. Is it too late?
No. Form 3115 lets you claim the cumulative missed depreciation in the current tax year without amending prior returns. The window stays open until you sell or the building is fully depreciated.
Do I have to amend a tax return?
No. Catch-up depreciation is taken through an accounting method change on the current return.
We renovated after we bought. Does that qualify?
Yes. Each capital improvement is its own placed-in-service event and can be studied on its own, even if the original building never was.
What does it cost?
The eligibility review is free. If a study makes sense, you get a flat fee quoted up front, based on the property, before any work begins.
How long does it take?
Typically two to four weeks from the start of the engineering work.
Does a study increase audit risk?
A properly documented study follows the IRS's own Cost Segregation Audit Techniques Guide. Documentation is what holds up under examination.
What if I don't have enough income to use the deductions?
The eligibility review includes a look at that. Deductions you can't use this year generally carry forward.
Other money your business may be owed
Many property owners qualify for more than one. We check during the eligibility review.
Find out what your building has been leaving on the table
The eligibility review costs nothing and gives you a preliminary view before you commit.