Cost segregation, explained simply.
It isn't a loophole or a gimmick. It's an established, IRS-recognized method for depreciating your property the way it actually wears out — and claiming those deductions sooner.
Your building is more than four walls.
By default, the IRS treats your entire building as a single asset depreciated over 27.5 years (residential) or 39 years (commercial). That's slow — and it ignores reality.
A cost segregation study breaks the property into its real components and assigns each to its correct, shorter recovery period. Carpet, cabinetry, specialty electrical, signage, and site improvements don't last 39 years — and shouldn't be depreciated as if they did.
How components get reclassified
Moving qualifying components into 5-, 7-, and 15-year classes is what front-loads your deductions.
Estimates get questioned. Engineering gets respected.
The IRS's own guidance points to a detailed, engineering approach as the most reliable method. Here's the difference it makes.
Documented, not guessed
Every reclassified component is supported by analysis of plans, costs, and on-site detail — not rules of thumb.
Audit-ready by default
Detailed support is built into the deliverable, so your position is well-documented from day one.
Maximized, accurately
A thorough study captures benefit that simplified methods routinely leave on the table — without overreaching.
Three concepts that make this powerful.
A deduction today beats one in 30 years
Deferring tax lets you keep and redeploy capital now. That head start compounds across a holding period and a portfolio.
Short-life assets can qualify for bonus
Components moved into shorter classes may be eligible for bonus depreciation, amplifying the first-year benefit. Your CPA confirms current-year rules.
You may not have missed your window
Already own the property? A study can often capture previously unclaimed depreciation in the current year — generally without amending past returns.
Cost segregation tends to make sense when…
- You bought, built, or substantially improved a property — recently or in past years.
- The building's cost basis is roughly $500K or more (rules of thumb vary).
- You expect to hold the property for several years.
- You have taxable income the accelerated deductions can offset.
Not sure? That's exactly what our free feasibility review answers — before you commit.
Potential first-year deduction reclassified on a $4M+ property is common — though every property is different.
Run your own estimateIllustration only. Not a projection of your results or tax advice.