Cost Segregation

Accelerate depreciation and strengthen your cash flow.

Unlock the hidden value within your buildings

Real estate is often among a business’s largest investments—yet many organizations leave meaningful tax benefits untapped. Cost segregation helps you recover those dollars sooner by identifying components of your building that qualify for shorter depreciable lives. By accelerating depreciation, you can reduce current tax liability, increase cash flow, and improve the return on your property investment.

Whether you’ve constructed a new facility, acquired a building, completed an expansion, or made significant improvements, we help you evaluate your opportunities and guide you through a cost segregation study that is engineered, documented, and defensible.

Who We Serve

Cost segregation can benefit both new and existing properties. We frequently support projects involving new construction, acquisitions, tenant improvements, expansions, and facilities placed in service in prior years—leveraging IRS “catch-up” depreciation to secure missed deductions without the need for return amendments.

We work with owners, investors, and developers across a wide range of industries and property types, including:

Commercial property owners and operators

Real estate developers and REITs

Manufacturers and industrial facility owners

Auto dealerships, warehouses, and distribution centers

Businesses with large or complex fixed assets

Companies that frequently renovate, expand, or make leasehold improvements

Understanding Cost Segregation​

Cost segregation identifies and reclassifies qualifying portions of a building into shorter depreciable categories, allowing deductions to be taken sooner. This strategy can significantly increase your cash flow in the early years of property ownership.

Typical reclassified asset categories include:

  • Tangible personal property (5 or 7 years)
    • Specialty electrical systems, dedicated HVAC, and equipment foundations
    • Decorative finishes, millwork, flooring, cabinetry, and more
  • Land improvements (15 years)
    • Parking lots, sidewalks, landscaping, lighting, signage, fencing, utilities
  • Real property (27.5 or 39 years)
    • Remaining structural components

Key benefits of a cost segregation study:

  • Accelerated depreciation deductions
  • Immediate cash flow improvement
  • Eligibility for bonus depreciation
  • Reduced federal and state tax liability
  • Ability to claim “catch-up” depreciation without amending prior returns
  • Improved documentation for IRS compliance and future renovations
  • Insight into asset classification for ongoing property management

Ideal candidates:

We typically see consistent benefits when projects include:

  1. New construction or acquisitions exceeding $750,000
  2. Renovations or improvements exceeding $200,000
  3. Properties placed in service as early as 1987
  4. Organizations with significant or complex fixed asset schedules

Whether your building is newly placed in service or has been in use for years, a properly executed study can reveal significant, often unexpected tax savings.

How We Help​

We provide strategic, engineering-driven cost segregation studies that deliver accelerated tax savings and comprehensive documentation aligned with IRS requirements.

  • Feasibility assessments to estimate potential tax benefits before initiating a complete study
  • Detailed engineering-based analysis to separate building components into 5-, 7-, 15-, and 39-year classifications
  • Site inspections to verify assets, validate construction plans, and thoroughly document property conditions
  • Review of construction drawings, cost records, and invoices to identify reclassifiable assets and indirect costs
  • Valuation of components using accepted third-party data sources
  • Calculation of accelerated depreciation, including bonus depreciation and Section 179, where applicable
  • Preparation of a complete, audit-ready technical report meeting IRS standards
  • Support with implementation into your depreciation schedules and fixed asset software
  • Guidance on retroactive (“look-back”) studies to capture depreciation you may have missed
  • Collaboration with your CPA, tax team, and construction professionals to ensure accurate classification and defensible results

How much is the benefit?

2022 or earlier

Up to $1.88 per sq. ft.

2023 and forward*

Up to $5.81 per sq. ft.

Pricing

We charge a low price per square foot for each building in our analysis. Our pricing reflects the individual needs of our clients, while ensuring them maximum return on their investment. Unlike other pricing models which incentivize aggressive tax positions, our fees are transparent, less expensive, and IRS friendly.

Pricing Features

Fixed Fee

% of Deduction

Sorren Price per Sq. Ft

Provides Certain Cost

Incentivizes Accurate Work

Less Expensive

Avoids IRS Fee Scrutiny

FAQ

Frequently Asked Questions

We compiled a list of answers to address your most processing questions regarding our Services.

Who can claim the 179D deduction?

Either the owner or the designer of a commercial building can claim the deduction. If the building owner pays federal income tax, it may deduct its own 179D deduction. If the building owner is a federal, state, or local government, or is a tax exempt entity, the building owner may allocate the deduction to designer of the building or its systems.

The One Big Beautiful Bill Act sunsets the availability of 179D deductions for any construction that starts after June 30, 2026. Building owners should keep this date in mind when planning the timing of near-term capital improvements since 179D often provides a sizeable benefit.

You still qualify for a 179D deduction. The Inflation Reduction Act included incentives to increase the 179D deduction benefit for building owners who: 1) paid prevailing wages to construct or renovate the building; and 2) employed a set minimum number of apprentices during the construction.

We do the energy modeling for you to determine the level of energy efficiency as part of our standard consulting process.

No. Renovations and additions to buildings qualify for the 179D Deduction as well.

Ready for the next step?

Let us connect you with one of our partners to evaluate your property and outline the potential benefits of a cost segregation study. It’s the first step in maximizing the value of your real estate investments.