FAQs

What is a cost segregation study and how does it work?

A cost segregation study is an engineering-based analysis that breaks down a building’s components into different asset classes, allowing certain parts to be depreciated over shorter time frames (5, 7, or 15 years) instead of the standard 27.5 or 39 years—resulting in faster tax deductions.

What types of properties qualify for cost segregation?

Any commercial or income-producing property—including office buildings, apartment complexes, retail centers, warehouses, and assisted living facilities—can qualify, whether newly purchased, constructed, or renovated.

Here are 2 to 3 key requirements to start a cost segregation study:

  1. Ownership of Commercial or Investment Property
    You must own a property that is either newly constructed, recently acquired, or significantly renovated. The property should be used for income-generating purposes (not a primary residence).

  2. Detailed Construction or Purchase Records
    Access to architectural drawings, construction invoices, purchase agreements, and depreciation schedules is essential. These documents help engineers and tax professionals break down building components accurately.

  3. Property Value Typically Over $500,000 (optional but recommended)
    Cost segregation is most beneficial for properties with a cost basis of $500,000 or more, where the tax savings outweigh the cost of the study.

How much can I save with cost segregation?

The savings depend on property size, type, and value, but many property owners can accelerate 20%–40% of the building's cost into shorter-lived assets, resulting in tens or hundreds of thousands of dollars in upfront tax savings.

Who qualifies for the R&D tax credit?

Any business that develops or improves products, processes, software, or technology may qualify—including those in manufacturing, engineering, software, architecture, agriculture, and biotech—even if the project fails.

What activities and expenses can be included in an R&D tax credit claim?

Qualifying expenses include employee wages for technical staff, materials used in testing, and contract research. Activities must involve technical uncertainty and a process of experimentation aimed at improving function, performance, reliability, or quality.