Cost Segregation Services
Maximize the return on your real estate investment.
Accelerate your depreciation. Improve your cash flow.
Cost segregation is a strategic tax planning tool that lets real estate investors and owners accelerate depreciation deductions and potentially defer federal income taxes* — putting more money to work now rather than waiting decades for slow, straight-line depreciation to deliver its benefits.
Buildings are typically depreciated over 39 years (commercial) or 27.5 years (residential rental). An engineering-based cost segregation study breaks a property down into its individual components, reclassifying those that qualify for accelerated depreciation over 5, 7, or 15 years or for immediate 100% bonus depreciation in Year 1. The goal is to identify personal property, qualified improvements, and land improvements that the IRS allows to be depreciated on an accelerated schedule, maximizing the tax benefit in the earliest possible year.
Cost Segregation is one of the most powerful tax strategies available to real estate investors. When prepared accurately by qualified cost segregation professionals with attention to the detailed specifications of a real property, it often puts money back in investors’ pockets.
Louis Guay, Principal — Kaufman Rossin
Cost segregation applies to real estate acquisitions, new construction, and renovation — and to virtually all building types, from apartments, hotels, offices, and restaurants to warehouses, retail strips, shopping malls, medical offices, car washes, gas stations, self-storage, and single-family homes. Even unique properties such as amusement parks, stadiums, and concert venues qualify and can generate significant tax benefits. You can also perform a look-back study on a property you’ve owned for years and capture catch-up benefits without amending prior tax returns.
*Tax benefits may vary based on your specific tax situation and applicable limitations. Consult with your tax advisor to determine eligibility.
What are the tax benefits of a cost segregation study?
The tax benefits of a cost segregation study vary by property type, purchase price, and year of acquisition. Traditional properties like apartments, hotels, and offices typically see 15% to 20% of costs moved to bonus depreciation. Restaurants and specialized properties like car washes, gas stations, and entertainment venues regularly reach 25% to 50%.
With 100% bonus depreciation now permanent under the One Big Beautiful Bill Act (OBBBA), the benefit is no longer spread over years. It lands in Year 1. A $10M apartment building could generate $1.5M in immediate deductions. A $2M restaurant could generate $400,000, deferring up to $150,000 in federal taxes.
Is a cost segregation study right for your property?
Cost segregation is applicable to nearly any commercial or residential investment property. Every building is unique, and the value of a study depends on factors including purchase price, building use, construction methods, design, and year acquired.
Not all cost segregation studies are created equal. Contact us for a complimentary, no-obligation cost-benefit estimate — we’ll tell you whether a study makes sense for your property before you commit to anything.
How we work
Engineering-based studies, tailored to your property
Our cost segregation team is led by engineers and tax accountants with deep experience in both engineering analysis and tax law. Every study we perform is built from the ground up based on the specific characteristics of your property — its construction methods, materials, design, and systems. This engineering-based methodology produces:
- More accurate component identification and classification
- Higher, more defensible depreciation allocations
- A detailed, engineering-based report to help meet IRS documentation requirements
- Catch-up studies for properties you’ve owned for years — without amending prior returns
Our team includes engineers and CPAs who collaborate throughout the study process, combining technical precision with tax strategy expertise. This cross-disciplinary approach is what separates a high-quality cost segregation study from a template-based estimate.
Kaufman Rossin’s cost segregation team can perform a study regardless of who prepares your tax return. And because we’re a full-service CPA and advisory firm, clients have access to our broader real estate tax advisory group — professionals who can help integrate cost segregation results with your overall tax strategy, including bonus depreciation planning, passive activity rules, and partial asset dispositions. That depth of integration is something boutique cost segregation firms typically can’t offer.
The Year 1 Impact of a Cost Segregation Study
Year 1 depreciation deduction on a $5,000,000 commercial property (2025). Without cost segregation, depreciation spreads evenly over 39 years. With cost segregation, eligible components qualify for 100% bonus depreciation — concentrating the benefit in Year 1.
Cost segregation for short-term rental investors
Short-term rental (STR) owners — whether you own one Airbnb property or a portfolio of vacation rentals — can benefit from cost segregation just as larger commercial investors do. The same engineering-based methodology applies, scaled to the size and value of your investment.
STR investors are often new to cost segregation or unsure whether the strategy applies to their situation. Our team works with STR owners and property managers to run a quick cost-benefit estimate at no obligation. If it makes sense for your property, we’ll tell you — and if it doesn’t, we’ll tell you that too.
What a Kaufman Rossin Cost Segregation Study Includes
- Review of real estate and construction documentation available and visit of the property (when applicable)
- Component-by-component cost allocation across all applicable asset classes
- Bonus depreciation analysis under current law
- IRS-compliant report with full documentation
- Coordination with your tax advisor or, if you choose, preparation by our in-house real estate tax team
Frequently asked questions about cost segregation
A cost segregation analysis is an engineering-based study of the costs associated with constructing or purchasing a commercial real estate property or a residential rental property. The study allocates those costs across different asset classes to identify components eligible for accelerated depreciation — including assets that may qualify for 100% bonus depreciation in the year the property is placed in service.
Cost segregation identifies which components of a property qualify for shorter depreciation lives — typically 5, 7, or 15 years — instead of the standard 39-year (commercial) or 27.5-year (residential rental) schedule. Components reclassified to these shorter categories may also be eligible for bonus depreciation, which allows the full cost of those components to be deducted in the first year the property is placed in service. For many investors, the prospect of an immediate, first-year deduction is what brings cost segregation onto their radar — cost segregation is the study that identifies how much of a property qualifies.
Cost segregation can be applied to nearly any type of commercial real estate — including offices, retail plazas, multifamily and apartment buildings, mixed-use developments, warehouses, restaurants, hotels, and industrial facilities — as well as residential rental properties, including single-family rentals and short-term rental (Airbnb/Vrbo-style) properties.
Our team of cost segregation engineers and professionals will analyze the property using different techniques and methodologies prescribed by the IRS. These include conducting a site visit, analyzing real estate documents, developing a Replacement Cost New (RCN) study, performing take-offs on construction drawings, reviewing schedules of values, and breaking out construction costs. A complete engineering-based report is then prepared to allocate the costs to the different classes of assets.
Yes — cost segregation isn’t limited to large commercial properties. Short-term rental owners and smaller real estate investors can benefit from the same engineering-based approach used for larger properties, scaled appropriately to the size and value of the investment. Kaufman Rossin works with short-term rental investors and property managers to determine whether a study makes sense for their specific property, with the same quality standards applied to studies of any size.
Yes. A cost segregation study also supports future partial asset dispositions — a strategy that can generate additional tax benefits when building components are later replaced or removed. The primary benefit of cost segregation is best understood as a deferral of taxes and a potential improvement in cash flow through the time value of money, rather than a permanent reduction in tax liability.
No. Kaufman Rossin’s cost segregation team can perform a study independent of who prepares your tax return. Clients who work with Kaufman Rossin also gain access to the firm’s broader real estate tax advisory group, who can help integrate the results of a cost segregation study with other tax strategies — an advantage not typically available through boutique, cost-segregation-only firms.
Kaufman Rossin’s cost segregation team includes engineers and CPAs who prepare tailored, engineering-based studies — not pre-fabricated, one-size-fits-all models — in accordance with IRS guidelines. Contact us for a complimentary, no-obligation cost-benefit estimate for your property.
