Reclassify your building assets for accelerated depreciation and reduced tax liability.
Cost segregation is an IRS-approved, engineering-based tax strategy that allows you to accelerate depreciation deductions on your commercial real estate property.
Normally, commercial buildings are depreciated over 39 years and residential buildings are depreciated over 27.5 years. However, cost segregation identifies specific building components that qualify as “personal property” and can be depreciated over a much shorter 5, 7, or 15-year period.
By reclassifying these assets, you can significantly reduce your tax burden and boost your return on investment.
Save tens of thousands or even millions in income taxes.
Free up capital for other investments or business needs.
Compare properties to Identify those with more significant tax savings
Property Type | Typical % Reclassified | First Year Tax Savings | First Year Depreciation |
Apartment Building | 24% | $475,800 | $1,309,400 |
Hotel | 23% | $460,000 | $1,228,300 |
Medical Office | 20% | $400,000 | $1,081,300 |
Office Building | 17% | $340,000 | $934,400 |
Retail Strip Center | 18% | $360,000 | $963,300 |
Warehouse | 16% | $320,000 | $885,400 |
Property Type | Typical % Reclassified | First Year Tax Savings | First Year Depreciation |
|---|---|---|---|
Apartment Building | 24% | $475,800
| $1,309,400
|
Hotel | 23%
| $460,000
| $1,228,300
|
Medical Office
| 20%
| $400,000
| $1,081,300
|
Office Building
| 17%
| $340,000
| $934,400
|
Retail Strip Center
| 18%
| $360,000
| $963,300
|
Warehouse
| 16%
| $320,000
| $885,400
|
*Based on a $5M building eligible for 100% bonus depreciation
Get answers to your cost segregation questions. Have other questions? Please contact us.
The ideal time is when the building is first constructed or acquired, as this allows you to maximize the tax benefits from the beginning. However, a retroactive study can be done up to 15 years later without amending tax returns. It’s almost never too late to improve your cash flow.
Absolutely. A cost segregation study can be performed on new construction, an acquisition, or a property you’ve owned for years.
CRS delivers a signed, certified, IRS-compliant report that includes asset classifications and descriptions, references to related tax citations and court rulings, and detailed asset-segregation spreadsheets.
The following list includes property that typically qualifies to be depreciated at accelerated rates through a cost segregation study:
5-Year or 7-Year Property (Based on MACRS Asset Class)
15-Year Property (Land Improvements)
Our engineers will carefully assess your property to determine which assets qualify for each category.
The CRS team holds decades of experience in the CRE and other related industries including engineering, architecture, tax, accounting, finance, construction and cost estimating. They are also members of and hold advanced accreditations in the American Society of Cost Segregation Professionals (ASCSP), the industry’s watchdog organization promoting oversight, education and the highest level of ethical and technical principles in the industry.
Managing Director Rob Rahner holds the Certified Cost Segregation Professional (CCSP) designation, the industry’s highest credential. This certification requires a minimum of seven years of experience, 7,000 hours of direct cost segregation project work, and successful completion of a rigorous exam covering technical, engineering, legal, tax, ethical, and other industry-related topics.
Our expertise and commitment to excellence in the field ensures our clients receive the most comprehensive, ethical and IRS-defendable reports. For more information on individual qualifications, see Our Team page.
The potential savings vary depending on the property type and value. Contact us for a free benefits analysis.
Assets vary by property type and require a detailed assessment to determine if they qualify for a reduced depreciation schedule. Some examples include:
5/7 Year Depreciation
15-Year Property (Land Improvements)
Our engineers will carefully assess your property to determine which assets qualify for each category.
A cost segregation study, on average, takes 4 to 6 weeks to complete and requires only a minimal time investment by you and your accountant. If you are under shorter time constraints, CRS can work with you to deliver a study to meet your deadline.
A DIY cost segregation report can lead to significant financial and legal risks due to the complexity of tax laws and engineering-based asset classification. Here’s why:
Hiring qualified cost segregation professionals like those at CRS ensures accuracy, maximized tax savings, and audit protection, making it a smart financial decision over attempting a DIY approach.
Most commercial or residential rental buildings with a cost basis over $750,000 (and in some cases less) will benefit from a cost segregation study. However, there are some instances where it may not be cost-effective to perform one:
At no cost to you, CRS can advise you or work with your accountant to determine if a cost segregation study is appropriate for your property. Our free benefits analysis provides a detailed estimate of the tax savings to be gained, enabling you to make an informed decision if and when the study would make sense to perform.
Take control of your property’s tax burden and discover the hidden potential in your assets.
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