Cost segregation services usually include a free savings estimate, a property review or site visit, an engineering-based cost allocation, and a written report your CPA uses on your tax return. Better providers also help with Form 3115 for look-back studies, partial asset dispositions after renovations, and support if the IRS ever asks questions.
This content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.
The core service: the cost segregation study
Every provider's main product is the study itself. Here's what that typically includes:
- Feasibility analysis. A free estimate of how much you could reclassify and save.
- Document review. Closing statements, appraisals, blueprints, construction invoices, or depreciation schedules.
- Property inspection. An on-site visit by an engineer or specialist, or a guided virtual tour for smaller properties.
- Cost allocation. Assigning dollar values to each component and sorting them into 5-, 7-, 15-, 27.5-, or 39-year classes.
- Final report. A written, documented report with methods, photos, asset lists, and a summary your CPA can enter directly.
Additional services worth asking about
| Service | What it does | When you need it |
|---|---|---|
| Look-back study | Applies cost segregation to a property bought in a prior year | You didn't do a study at purchase |
| Form 3115 support | Calculates the catch-up adjustment and helps prepare the form | Any look-back study |
| Partial asset disposition | Writes off the remaining value of components you removed | Renovations, roof or HVAC replacements |
| Repair vs. capital review | Identifies costs that may be deductible as repairs | Ongoing maintenance and improvements |
| Qualified improvement property review | Separates 15-year interior improvements in commercial buildings | Tenant buildouts and remodels |
| 179D energy deduction | Analyzes energy-efficient commercial buildings | New construction or major upgrades |
| Audit support | Defends the study if the IRS examines it | Peace of mind |
How the process usually flows
- Week 1: You request an estimate and share basic property details.
- Weeks 1–2: You sign an engagement letter and send documents.
- Weeks 2–4: Site visit or virtual tour, then cost analysis.
- Weeks 3–6: You and your CPA receive the final report.
Timelines stretch during tax season, especially before the April and October deadlines. Start early.
What a good provider should give you
- A detailed report, not a two-page summary
- Credentials of the people who did the work, such as engineers or certified cost segregation professionals
- A clear explanation of methods used and sources of cost data
- Reconciliation showing the allocated costs add up to your actual basis
- Coordination with your CPA, including a depreciation schedule they can import
- Written terms on audit support
What cost segregation services don't do
A cost segregation firm usually doesn't prepare your tax return. Your CPA still decides how to apply the study, whether to take bonus depreciation, and how it fits with passive loss rules and your state taxes. The best results come when the study provider and your CPA work together.
Frequently asked questions
Do I need a site visit?
Can my CPA do the study?
What documents should I gather?
See what your property may qualify for
Run our 2-minute STR Qualification Quiz or model your Low / Mid / High cost segregation range.
Related guides
How to Choose a Cost Segregation Company: 10 Questions to Ask
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Read guideWhat's in a Cost Segregation Report (and How to Read One)
A cost segregation report should be more than a summary page. Learn the sections a quality report includes and what to check before you file.
Read guideForm 3115 for Cost Segregation: Catch Up Missed Depreciation Without Amending
Form 3115 lets you claim years of missed depreciation in one year, without amending returns. Learn how it works with look-back cost segregation studies.
Read guideHow Much Does a Cost Segregation Study Cost? 2026 Price Guide
What does a cost segregation study cost? See typical 2026 price ranges by property type, what drives the fee, and how to tell if it pays off.
Read guideThis content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.