Services / Cost Segregation
Cost Segregation StudyAccelerate Depreciation & Reduce Taxes
A cost segregation study identifies building components that qualify as 5-, 7-, and 15-year property instead of 39-year (commercial) or 27.5-year (residential) property. Those shorter-life assets can then be depreciated far faster, and under current law, most of them qualify for 100% bonus depreciation in year one.
Your commercial property is more than a building, it is an engine for depreciation-driven tax reduction.
100%
Bonus depreciation, restored permanently for property acquired after Jan 19, 2025
5 / 7 / 15
The shorter asset lives a study can unlock inside your building
3–4 weeks
Typical timeline from documentation to completed study
Form 3115
How prior-year properties catch up without amending returns
What Is a Cost Segregation Study?
A cost segregation study is an engineering-based analysis that breaks down a commercial or residential rental property into its individual components. Instead of depreciating the entire building over 27.5 years (residential) or 39 years (commercial), cost segregation reclassifies components like electrical systems, plumbing, flooring, cabinetry, and site improvements into shorter depreciation schedules.
This process is fully IRS-sanctioned and supported by the Modified Accelerated Cost Recovery System (MACRS) under the Tax Reform Act of 1986. Our engineering-based study team prepares each study to IRS standards, following the IRS Cost Segregation Audit Techniques Guide. Most studies are completed remotely from construction documents, closing records, and property data, so a site visit is usually not required. Your strategist manages the process end to end and implements the results on your return.
Your commercial property is more than a building, it is an engine for depreciation-driven tax reduction.
Services
Key Benefits of a Cost Segregation Study
Significant Cash Flow Improvement
By accelerating depreciation deductions, you defer income taxes and keep more cash in your pocket during the early years of ownership.
IRS-Defensible Methodology
A study performed to IRS standards, with proper engineering-based cost estimates, detailed asset classifications, and supporting documentation, stands up to audit scrutiny. We follow the IRS Cost Segregation Audit Techniques Guide to ensure full compliance.
Bonus Depreciation & Section 179 Benefits
Qualified improvement property and certain shorter-life assets may qualify for bonus depreciation or Section 179 expensing. Bonus depreciation is restored to 100% for qualifying property acquired after January 19, 2025, so a study can turn decades of deductions into a first-year deduction.
Retrospective Application on Existing Properties
Already own a property placed in service in prior years? A look-back cost segregation study (IRS Form 3115, Change in Accounting Method) lets you capture missed depreciation in a single year without amending prior returns.
Priced Against a Feasibility Check
Before any study is ordered, we assess your property's cost basis, acquisition date, and your tax situation to confirm the study is worth more than it costs. If it is not, we tell you.
Who Should Get a Cost Segregation Study?
Cost segregation is ideal for owners of:
Commercial real estate
Office buildings, retail centers, industrial facilities, medical offices, warehouses
Multifamily residential
Apartment complexes with 4+ units
Hospitality properties
Hotels, motels, resorts
Self-storage facilities
Senior living and assisted living facilities
Tenant improvements and build-outs
Leasehold improvements made by either landlord or tenant
New construction and acquired existing properties
A preliminary feasibility assessment can determine whether a full study makes sense for your property.
Process
How the Process Works
Feasibility Assessment
We review your property details, cost basis, placed-in-service date, and tax situation to confirm that a cost segregation study will deliver meaningful savings.
Document Collection
We gather construction documents, closing records, and property data. Most studies are completed remotely, so a site visit is usually not required.
Engineering Analysis
Our engineering-based study team quantifies and classifies every component by its appropriate MACRS life, following the IRS Cost Segregation Audit Techniques Guide.
Tax & Allocation Report
We produce a comprehensive engineering-based report that details each asset class, cost allocation, and the resulting depreciation schedule. This report serves as your audit-ready documentation.
Tax Return Implementation
We implement the study on your tax return, including any Form 3115 filing for look-back studies.
Ongoing Support
As you renovate, expand, or dispose of property, we provide updated analysis to ensure you continue maximizing depreciation benefits.
TimelineMost studies are completed in 3-4 weeks from documentation receipt.
100% Bonus Depreciation Is Back
Under the Tax Cuts and Jobs Act, bonus depreciation was scheduled to phase out: 80% in 2023, 60% in 2024, 40% in 2025, and gone by 2027. The One Big Beautiful Bill Act, signed in July 2025, reversed that. 100% bonus depreciation is restored permanently for qualifying property acquired after January 19, 2025.
Assets a study reclassifies into 5-, 7-, or 15-year lives generally qualify for bonus depreciation, so a study can turn decades of deductions into a first-year deduction. Property acquired on or before January 19, 2025 remains under the old phase-down percentages for its acquisition year, which makes the acquisition date a fact worth confirming, not assuming. A binding purchase contract signed before January 20, 2025 counts as the earlier acquisition date.
There is no expiring window and no reason to rush a bad study. The right move is a feasibility assessment on your actual property and tax situation.
Meet Jesse Lipscomb
Founder and CEO, Roadmap Tax Services
Enrolled Agent | Series 65 Financial Advisor
Most tax firms file your return and disappear. Jesse built Roadmap Tax to do the opposite. With dual expertise in tax strategy and financial advisory, Jesse works with high-income earners and business owners year-round to find savings their previous CPA never looked for. His clients do not wonder if they are overpaying. They know exactly where their money is going, what strategies are working, and what is coming next. That is what happens when your tax professional actually knows you.
The Team
Your tax advisors
A dedicated team of Enrolled Agents working with you year-round.
Sandy Kisner, EA
Tax Strategist
Sandy focuses on helping entrepreneurs and high-earning professionals reduce their tax burden and build long-term wealth. She works with small business owners, real estate professionals, physicians, investors, and brokers, delivering proactive tax planning tailored to each client. Clients rely on Sandy for clear guidance, creative problem-solving, and practical solutions that turn complex tax laws into real financial opportunities.
Alex Lazo, EA
Tax Strategist
Alex brings nearly five years of experience helping clients take control of their tax outcomes. A Point Loma Nazarene University accounting graduate, he specializes in proactive tax planning for real estate investors and self-employed business owners. Originally from San Diego, Alex is known for making complex tax concepts accessible and actionable, helping clients use the tax code as a tool for building wealth.
Questions?
Cost Segregation FAQ
Is a cost segregation study legal? Does the IRS approve of it?
Yes, cost segregation is a fully legal, IRS-sanctioned tax strategy. The IRS publishes a detailed Cost Segregation Audit Techniques Guide that outlines proper methodology. Studies performed using engineering-based approaches and following IRS guidelines are regularly upheld in audits.
Can I do a cost segregation study on a property I have owned for years?
Yes. A look-back study (via IRS Form 3115, Change in Accounting Method) allows you to catch up on missed depreciation from prior years. The unclaimed depreciation from previous years can be taken in the current tax year as a Section 481(a) adjustment, often producing a large immediate deduction. No amended returns needed.
How much does a study cost, and what is the return?
Study pricing depends on the property, and we quote it after a feasibility assessment rather than publishing a range. Whether the resulting deductions justify the fee depends on your cost basis, acquisition date, and tax rate, which is exactly what the feasibility assessment answers before you commit. If the numbers do not support a study, we will say so.
What types of assets get reclassified through cost segregation?
Common reclassifications include interior finishes (flooring, ceiling tiles, millwork), certain electrical and plumbing components, specialty lighting, landscaping and site improvements, parking lots, signage, and security systems. Each is categorized into 5-, 7-, or 15-year property. Building-wide HVAC is generally 39-year structural property and is not part of the shorter-life reclassification.
Do I need a cost segregation study if I use bonus depreciation?
Yes, even more so. Bonus depreciation applies to assets with recovery periods of 20 years or less. A cost segregation study moves as many assets as possible into those shorter-life classes, maximizing the assets eligible for bonus depreciation. Without a study, you are leaving bonus depreciation dollars on the table.
Can a cost segregation study trigger depreciation recapture when I sell?
Cost segregation changes the timing of depreciation, not the total. What it does change is how recapture works at sale: components reclassified as 5-, 7-, or 15-year personal property are subject to Section 1245 recapture at ordinary income rates, while depreciation on the remaining structure falls under the Section 1250 rules, where unrecaptured gain is taxed at up to 25%. Recapture is a real cost that belongs in the analysis. It is also frequently deferred through a 1031 exchange or offset by the time value of the early deductions. We model both sides before recommending a study.
Get Your Cost Segregation Study Started
Start with a feasibility assessment. If the numbers support a study, we coordinate it end to end and implement it on your return.