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How Much Does a Cost Segregation Study Cost?

The cost to complete a cost segregation study depends on the scope of work and amount of time required to complete a quality study. CostSegRx uses the detailed engineering approach on all studies. Small residential studies start at $895. Larger residential, multifamily and commercial projects require a custom quote.

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Single Family Residential

$895 +

1 Unit

Multifamily

Custom Quote

2+ Units

Commercial

Custom Quote

All Assets Classes

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Fixed Asset Review

Your Fixed Asset Schedule (also called a Depreciation Schedule) is the foundation for accurate tax reporting. Before filing your first-year tax return, it’s critical to review this schedule to ensure everything is correct.

As part of our service, we’ll review your schedule at no cost to verify key details, including:

  • Correct building basis

  • Proper land allocation

  • Accurate in-service date

  • Any capital improvements made to the property

A thorough review helps prevent costly errors and ensures you maximize the benefits of your cost segregation study.

Detailed Engineering:

CostSegRx utilizes the Detailed Engineering Cost Estimate Approach and the Detailed Engineering Approach From Actual Cost Records.

Our cost segregation studies performed meet the requirements of a Quality Cost Segregation Study per the Cost Segregation Audit Technique Guides and the Minimum Quality Standards per the American Society of Cost Segregation Professionals.

Audit Support

We stand behind our work. If the IRS reviews your Cost Segregation Study, we’ll be there to help. Our team provides audit assistance at no additional charge, supporting you with documentation, responses, and expert guidance through the IRS Field Agent level.

While no one can guarantee IRS acceptance in every case, you can feel confident knowing we’ll provide the resources and expertise to defend our methodology. 

What Audit Support Includes

  • Document Review: We’ll help organize and provide the supporting documents the IRS may request, including your cost segregation study and related records.

  • Clear Communication: Our team engages directly with IRS examiners to explain the study in plain language and address technical questions.

  • Methodology Support: We stand behind our asset classifications and provide documentation to show how they meet IRS guidelines.

  • Guided Responses: We’ll assist with preparing responses to inquiries and, when needed, participate in calls or meetings with the IRS.

With CostSegRx audit support, you’re not left on your own. We’re here to provide the guidance and expertise you need to navigate an IRS review with confidence.

Free Adjustments

We stand behind our work and provide complimentary adjustments to keep your cost segregation study accurate and up to date.

Here’s what that includes:

  1. Change in Property Usage:
    • Minor Property renovations or modifications that alter its components, such as adding new assets (e.g., HVAC systems) or structural changes, the cost segregation study may need to be adjusted to account for these updates.
  2. Reclassification of Assets:
    • Due to changes in IRS regulations or updated guidance, certain assets may need to be reclassified to a different depreciation category.
  3. Correction of Minor Errors:
    • If any discrepancies or minor errors are found in the initial report, the corrections are free to maintain accuracy and customer satisfaction.
  4. New Tax Planning Strategies:
    • Property owners may decide to adopt new tax planning strategies that affect how they want their property’s assets to be depreciated. In such cases, free adjustments are offered to align with these goals.

CPA Assistance

Providing Certified Public Accountants (CPAs) with the necessary support, resources, and expertise to integrate the findings of a cost segregation study into a client’s tax return. Ensuring that the CPAs fully understand the technical details and proper application of the study results.

What CPA Assistance Includes:

  1. Detailed Report and Analysis:
    • Providing the CPA with a comprehensive cost segregation report that includes all the breakdowns of property components, asset classifications, and depreciation schedules.
    • Supplying a clear summary and analysis of the study, making it easier for the CPA to review and utilize the information for tax filing purposes.
  2. Depreciation Schedule Integration:
    • Assisting the CPA in integrating the accelerated depreciation data into the property owner’s tax software.
    • Explaining which assets should be classified as 5-year, 7-year, 15-year, or 27.5/39-year property based on IRS guidelines.
  3. Tax Strategy Consultation:
    • Collaborating with the CPA to strategize on the best ways to leverage the cost segregation findings.
    • Providing guidance on how the cost segregation impacts other tax provisions, such as the Section 179 deduction, bonus depreciation, or qualified improvement property (QIP) rules.
  4. Responding to CPA Queries:
    • Addressing any questions the CPA may have about the cost segregation methodology, specific asset classifications, or tax regulations.
    • Clarifying technical details to ensure the CPA has full confidence in using the study results.
  5. Compliance and Audit Support:
    • Assisting the CPA with documentation and preparation if the client’s cost segregation results are questioned during an audit.
    • Providing any additional supporting documents or information the CPA needs to substantiate the study’s findings to the IRS.

 

481(a) Adjustments

When you implement a cost segregation study for the first time, the IRS requires an accounting adjustment under Section 481(a) to ensure income and expenses are recognized correctly. This adjustment “catches up” depreciation that should have been taken in prior years, without the need to amend past returns.

At CostSegRx, we assist with preparing the 481(a) adjustment as part of your cost segregation study, working alongside your tax advisor to ensure accuracy and compliance.

How It Works

  • Asset Reclassification: Eligible assets are reclassified from long-life property (27.5 or 39 years) into shorter recovery periods (5, 7, or 15 years).

  • Positive Adjustment: If too little depreciation was previously taken, you may be eligible for a one-time catch-up deduction to reduce taxable income.

  • Negative Adjustment: If excess depreciation was previously taken, income may need to be increased to remain compliant.

Benefits of a 481(a) Adjustment

  • Potential Immediate Tax Savings: Positive adjustments can provide a significant deduction in the current year.

  • No Amended Returns: All changes are reported on the current tax return, avoiding the need to reopen prior filings.

  • Improved Cash Flow: The catch-up deduction may result in additional savings that free up capital for reinvestment.

Results may vary depending on your specific tax situation. CostSegRx provides support in preparing these adjustments, but we recommend consulting with your tax advisor before filing.

Form 3115 Attachment

When filing Form 3115 (Application for Change in Accounting Method) with the IRS, a detailed attachment must be included to support the request. This form is required when a business or individual changes their accounting method, for example, switching depreciation methods after completing a cost segregation study.

At CostSegRx, we prepare the supporting attachment to ensure your application is complete, accurate, and compliant.

What the Attachment Includes

  • Details of the Accounting Change
    We document both the old and new methods, explain the reason for the change (such as accelerating depreciation through a cost segregation study), and provide the required background.

  • Calculation of the 481(a) Adjustment
    If applicable, we calculate the cumulative effect of the accounting method change and show how the adjustment amount was derived, ensuring no duplication or omission of income or expense.

  • Technical and Legal Support
    The attachment cites the relevant IRS regulations, revenue procedures, and tax codes that justify the change, and demonstrates how it complies with IRS requirements.

Why It Matters

The Form 3115 attachment is a critical part of the application. Without it, your filing could be delayed, questioned, or denied. By working with CostSegRx, you can be confident that your supporting documentation is thorough, defensible, and aligned with IRS standards.

CostSegRx assists with the preparation of Form 3115 attachments as part of your cost segregation study. Final filing decisions should be made in consultation with your tax advisor.

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