You have the construction ledger, so the study is priced off real cost detail. Shorter recovery periods, front-loaded cash flow.
A cost segregation study is an engineering-based analysis that breaks a property's cost basis into its component parts: land improvements, personal property, building systems. Each is reclassified into its correct IRS recovery period. Instead of depreciating the whole building over 27.5 or 39 years, large pieces shift into 5-, 7-, and 15-year buckets, accelerating deductions into the years they matter most.
Front-loaded depreciation is leverage. A study completed in year one of ownership often unlocks a year-one deduction equal to 20–30% of the building's depreciable basis. Paired with bonus depreciation and the right income character, that deduction can offset hundreds of thousands of taxable income.
A repeatable engagement, not a guessing game.
Each case below was solved with cost segregation studies as a primary lever.
Generally when the property's depreciable basis exceeds ~$500k, you have meaningful taxable income to offset, and you intend to hold for at least a few years. We screen this at the start of a Strategy Session.
Yes. A 'look-back' study captures missed depreciation as a current-year deduction via Form 3115, with no amended returns required.
The 2025 tax law made 100% bonus depreciation permanent for most qualifying property acquired after January 19, 2025. That makes the study more valuable: the reclassified 5-, 7- and 15-year property can often be written off in full in year one. Property acquired earlier sits under the old phase-down rates, so the acquisition date matters and we model it.
No. The IRS publishes its own Cost Segregation Audit Techniques Guide, and engineering-based studies that follow it are routinely sustained on examination. The risk is poor documentation, not the strategy itself.
It depends on the order and the relinquished property's existing depreciation. Done right, you keep the cost-seg benefit; done wrong, you trigger recapture. We coordinate before either side closes.
RSVP for the Asset Accumulation Formula Masterclass. One live session on the strategies residential developers use to keep more of what they build, and how to tell whether they apply to you.
Have one specific question instead? Book a Strategy Session with Jose.