Cost Segregation Study Services & Pricing

Cost segregation services at a glance

A cost segregation study identifies supported building costs that belong in shorter depreciation categories. The business decision is whether moving those deductions forward produces enough usable tax benefit to justify the study and implementation costs.

Published study pricing: $1 per square foot, with a $2,000 minimum per study. Cost segregation is priced separately from tax advisory. The written proposal defines the property, deliverables, implementation responsibilities and any additional work. Review study pricing and what to compare.

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Test an illustrative tax-benefit scenario

Which property owners should consider a study?

Start with a feasibility review if you purchased, constructed or substantially improved income-producing real estate, or if an existing property's depreciation schedule has never been evaluated. Common situations include an owner who bought the building used by their business, a landlord adding rental units, and an investor reviewing a commercial portfolio.

Short-term rental and Airbnb owners: coordinate property classification and participation records with the depreciation analysis.
Multifamily owners: reconcile each building, unit improvements and shared site costs.
Business owners with commercial buildings: separate the operating business from the property's ownership and tax treatment.
Warehouse owners and medical-office owners: identify the actual use of building systems rather than relying on a generic reclassification percentage.

A purchase price alone cannot establish the deduction or make the study worthwhile. Planned sale timing, land allocation, improvements, prior depreciation, expected income and loss limitations all affect the decision.

What the study and tax implementation need to cover

AE's published study service includes an engineering-based analysis, component classification, depreciation calculations and a supporting report. The scope should identify the property and tax years, the records needed, and whether additional improvement histories or prior studies must be reconciled.

Property and basis review. Reconcile the closing statement, land allocation, improvement invoices and existing asset schedule.
Classification support. Document the function and cost of components, with the rationale for recovery periods.
Depreciation comparison. Compare the existing treatment with the proposed schedules and identify elections or restrictions.
Return coordination. Establish who updates the tax return and fixed-asset schedule, and whether a method change is needed.
Support after delivery. Confirm the scope of preparer questions, report corrections and examination support in the written engagement.

A report, a Form 3115 catch-up calculation, Form 3115 preparation, and filing the return are different deliverables. Confirm which are included before signing. Review the MACRS depreciation classes and conventions. See the document checklist and report-to-basis reconciliation guide.

Bonus depreciation and current-year usability are separate questions

Under current federal rules, qualifying property acquired and placed in service after January 19, 2025 generally qualifies for 100% bonus depreciation. Asset eligibility, acquisition facts, required depreciation systems and elections still matter. A study does not make every component eligible, and land is not depreciable. See IRS Publication 946.

A deduction may be limited or suspended under basis, at-risk and passive-activity rules. The property's rental use and the owner's participation must be evaluated independently. See IRS Publication 925. State treatment and tax on a later disposition also affect the result.

Use our scenario calculator to distinguish reclassified basis, additional first-year depreciation and an illustrative usable federal benefit. It is an initial model, not a property valuation or a determination of your tax treatment.

Already owned the property for several years?

A lookback review starts with the original acquisition and service dates, the depreciation actually claimed, and every subsequent improvement. Do not replace historical rules with the bonus percentage in effect when the study is ordered.

The correction method depends on whether an accounting method was adopted and on the available procedures. Review Form 3115 and catch-up depreciation with the return preparer before choosing a filing approach. Properties involving exchanges, related parties or changes in ownership need additional basis analysis.

When to pause before ordering a study

Pause when you cannot reconcile the purchase price to depreciable basis, cannot establish who owns the assets, lack the prior depreciation schedules, or expect a near-term sale that has not been modeled. The same applies when the projected loss will be suspended and the proposal presents it as immediate cash savings.

A smaller deduction that is supported and usable can be more valuable than a larger estimate that cannot be implemented. No provider can determine the outcome simply by multiplying the purchase price by a standard percentage.

What to bring to the first conversation

Have the property type, approximate square footage, purchase price, acquisition date, placed-in-service date and ownership entity available. Note whether you are planning a sale, recently renovated, acquired from a related party, or completed a 1031 exchange. These facts help define the review.

Tax returns, closing documents and detailed asset records should be exchanged through the agreed document-collection process after the scope is established. The initial call is an opportunity to identify the next steps, not a promise of a particular deduction.

Frequently Asked Questions

How much does an AE cost segregation study cost?

Published pricing is $1 per square foot with a $2,000 minimum per study. The written quote controls the scope and any additional work. Studies are separately priced from advisory.

Is Form 3115 filing included?

Do not assume that a catch-up calculation includes preparing and filing Form 3115. The proposal should identify the responsible preparer and the fees for implementation.

Can a study create an immediate refund?

A study creates a classification and depreciation analysis. Whether it changes current tax depends on the return, applicable limitations and filing method. A deduction is not a dollar-for-dollar refund.

Can I use my existing CPA?

Define the coordination arrangement in the proposal. Identify who reviews the report, updates the asset schedule, prepares any method change and files the return.

Owner decisions and working checklists

Talk Through Your Situation

Every situation turns on its own facts. Schedule a discovery call and we will walk through what applies to you, what it is worth, and what it would take to put it in place.