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SEE IF COST SEGREGATION STUDY WOULD PROVIDE A SIGNIFICANT TAX BENEFIT

SEE IF COST SEGREGATION WOULD PROVIDE A SIGNIFICANT TAX BENEFIT

If you purchased, constructed, or remodeled in the past 15 years and spent more than $350,000, a Cost Segregation Survey may significantly benefit you.

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What is cost segregation?

Cost Segregation is a strategic tax planning tool widely used by real estate investors and property owners to accelerate depreciation deductions on federal tax returns. The accelerated depreciation deduction can result in significant tax savings.

What is a Cost Segregation Study & How Does it Work?

When a property is purchased, it is comprised of the building structure and all of its interior and exterior components. On average, 20% to 40% of those components fall into tax categories that can be written off much quicker than the building structure. Our cost segregation experts and engineers will dissect the construction cost or purchase price of the property that would otherwise be depreciated over 27 ½ or 39 years to identify all property-related costs that can be depreciated over 5, 7, and 15 years.

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Ideal candidates

Real estate investors or property owners that build, purchase, remodel or expand real estate can generate tax savings via a Cost Segregation Study

  • Commercial, industrial or residential rental properties
  • Owner-occupied commercial or business properties
  • Section 754 and 743(b) Step-Up-In-Basis Transactions
  • Properties with a basis more than $350,000
  • Properties placed in service after 1986
  • Companies with significant amount of fixed assets

Benefits

Accelerate Tax Depreciation Deductions

Create immediate tax savings by increasing depreciation deductions early in the asset’s life

Tax Savings

Lowering taxable income via depreciation, increases cash flow by reducing your tax liabilities.

Increased Cash Flow

Lower tax liabilities allows property owners to grow their business by reinvesting the savings into their business

Future Opportunities for Savings

As assets are removed from service later, cost segregation studies make it easy for future partial asset dispositions and write-offs

How Does the Cost Segregation Study Process Work?

Our streamlined three-step process makes accessing your tax benefits simple and efficient.

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No-Cost Preliminary Analysis

We analyze your property details and provide a complimentary estimate of potential tax savings based on your building’s specifics.

Detailed Engineering Analysis

Our engineers conduct an on-site inspection and review 150+ building components to identify all opportunities for accelerated depreciation, including flooring, lighting, electrical, plumbing, cabinetry, landscaping, and parking lots.

Tax Savings Delivered

We analyze your property details and provide a complimentary estimate of potential tax savings based on your building’s specifics.

How Does the Cost Segregation Study Process Work?

A cost segregation study is an engineering-based analysis that reclassifies components and improvements of commercial real estate between real and personal property.  This reclassification accelerates the depreciable lives from 27.5 or 39 years to 5, 7, or 15 years.

A study can be completed in the year the building or improvements are placed in service.  However, it can also be done for properties acquired or constructed since 1986 without amending prior-year tax returns.

No, cost segregation cannot be done on a primary residence.  The IRS allows cost segregation studies only for income-producing or business-use properties, such as rental real estate or commercial buildings.

Yes, you can perform a cost segregation study on residential rental properties.  The IRS allows property owners to break down building components into shorter depreciation categories, typically 5, 7, or 15 years, instead of the standard 27.5 years.

We work on a contingency basis—you pay nothing upfront.  Our fee is a percentage of the credit we secure for you, so we only get paid when you get your money.  If we don’t get you the tax savings, you pay nothing.  This risk-free approach aligns our success with yours

Legacy Tax & Resolution Services offers no-upfront-cost studies, where fees are based on project scope and potential tax savings.  In most cases, the tax benefits far exceed the study cost, often returning 10x or more in savings within the first few years.

That said, the true value of a cost segregation study lies in the tax savings it unlocks.  Property owners often see tens or even hundreds of thousands of dollars in accelerated depreciation benefits, far outweighing the initial cost of the study.

Firms like Legacy provide tailored cost segregation studies for property owners across the U.S., focusing on maximizing ROI and ensuring IRS-compliant documentation.  With experience across various industries and property types, Legacy helps businesses reduce their taxable income and improve cash flow, making the study a smart financial move.

Yes, cost segregation is often well worth it, especially for commercial and rental property owners looking to improve cash flow and reduce tax liability.  By accelerating depreciation on specific building components, property owners can significantly lower their taxable income in the early years of ownership.  This can result in tens or even hundreds of thousands of dollars in immediate tax savings, depending on the property’s size and value.

Cost segregation is particularly beneficial for properties acquired, constructed, or renovated after 1987 and with a value of at least $150,000.  The savings typically outweigh the study’s cost, often delivering a full return on investment within the first year through reduced tax payments.

Partnering with an experienced firm ensures the study is done accurately, in compliance with IRS guidelines, and tailored to your property type.  We have worked with thousands of property owners across industries, helping them realize long-term financial benefits.

While a full study is typically done on a fully constructed building, we can provide an estimate on the tax savings from your construction project.  The full study will be delivered upon completion of construction

Generally, we request:

  • A current tax depreciation schedule
  • Building cost information
  • Blueprints or architectural drawings and renovation plans, if applicable
  • Access to the property for an on-site inspection and walk-through

A cost segregation study typically takes approximately three to six weeks from the time we receive all the appropriate documentation.

Your property likely qualifies if:

  • It’s a commercial building or building improvements with a remaining depreciable basis
  • The building or improvement cost basis is at least $200,000
  • You anticipate holding the property for at least three years

A Cost Segregation study reduces a building owner’s income taxes by up to $100,000 for every $1,000,000 in building costs.  The tax savings are anywhere from 3% to 10% of the building cost.

To apply cost segregation on your tax return, you must first complete a cost segregation study by a qualified provider.  The study identifies assets that can be reclassified for shorter depreciation schedules.

No, cost segregation is not going away.  Although certain tax incentives tied to cost segregation (such as 100% bonus depreciation) have changed due to legislation, the underlying practice of accelerating depreciation remains fully viable.  Tax professionals confirm that cost segregation continues to provide value by shifting asset lives into shorter recovery periods.

No, cost segregation cannot directly offset W-2 income.  The deductions from a cost segregation study apply to passive income from rental or investment properties, not to active income such as wages or salaries.  However, real estate professionals who qualify under IRS rules may be able to use depreciation deductions from cost segregation to offset W-2 income.

Yes, you can attempt to perform your own cost segregation study, but it is not recommended unless you have the expertise in engineering, tax law, and construction cost estimation.  A proper cost segregation study involves a detailed analysis of building components, IRS classification rules, and the accurate allocation of costs to shorter depreciation categories, such as 5, 7, or 15 years.

The IRS prefers engineering-based studies conducted by qualified professionals.  A poorly executed DIY study may lack proper documentation or fail to comply with IRS standards, which could lead to audit risks, penalties, or disallowed deductions.

That’s why most property owners choose to work with experienced providers.  Our team includes engineers and tax specialists who deliver IRS-compliant studies that maximize your tax benefits while minimizing risk.  We handle everything from property evaluation to final reporting, so you don’t have to navigate complex rules on your own.

If you want to unlock significant tax savings while staying compliant, it’s best to leave the study to professionals with a proven track record.

Cost segregation identifies and reclassifies components of a commercial or income-producing property into shorter depreciation categories.  Instead of depreciating the entire building over 27.5 or 39 years, cost segregation separates qualifying assets, such as flooring, lighting, cabinetry, and landscaping, into 5-, 7-, or 15-year categories.  This allows property owners to accelerate depreciation and reduce taxable income in the earlier years of ownership.

The process begins with a detailed engineering-based analysis of the property.  Experts evaluate construction costs, building plans, and asset details to determine which components can be depreciated faster under IRS guidelines.  The result is a cost segregation report that can be used during tax filing to support accelerated depreciation claims.

Working with an experienced firm like Legacy helps ensure accuracy, compliance, and maximum benefit.  Legacy handles the entire process from document review to final report, helping property owners unlock significant tax savings and improve cash flow.

This strategy is especially beneficial for newly acquired, constructed, or renovated properties, and often pays for itself within the first year through tax savings.

No, a properly conducted cost segregation study has never triggered an audit.  In fact, if you are audited for any reason and the cost segregation study comes into question, we will defend the audit related to the cost segregation study at no cost.

Savings vary, but within the first five years of building ownership, owners could save up to approximately $100,000 for every $1,000,000 in building costs.

A cost segregation study can typically accelerate depreciation on many building components, including:

  • Electrical installations (e.g., dedicated computer power, special lighting) 
  • Plumbing systems (e.g., kitchen plumbing, bathroom fixtures) 
  • HVAC components 
  • Flooring (e.g., carpet, vinyl, tile) 
  • Window treatments 
  • Cabinetry and countertops 
  • Decorative finishes and millwork 
  • Security systems 
  • Fire protection systems 
  • Parking lot paving and lighting 
  • Landscaping and site improvements
  • Certain building exterior components

Yes, you can, but if they knew how to do this, wouldn’t they have already done it for you?

Cost Segregation requires a certified engineering team with extensive experience to be defined in an audit.  Do not take a chance on an IRS clawback that could result in substantial penalties and perhaps even a criminal investigation

Also, if they did miss this substantial deduction, what else are they missing?

We are a national tax recovery firm finding what many other tax professionals miss.

These deductions are only the beginning of our discovery process to determine what other opportunities you are not taking advantage of.

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