Best Cost Segregation Companies

Considering cost segregation for your commercial or investment real estate? The best cost segregation companies help you reap the most tax benefits while remaining compliant with IRS guidelines.

Erica began writing on small business topics in 2008. She joined Merchant Maverick in 2018 and focuses on loans, accounting, and POS. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll. She has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a graduate of Limestone University and resides in Greenville, South Carolina.

• WRITTEN & RESEARCHED BY

  Erica Seppala Erica began writing on small business topics in 2008. She joined Merchant Maverick in 2018 and focuses on loans, accounting, and POS. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll. She has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a graduate of Limestone University and resides in Greenville, South Carolina.

  Editor & Senior Staff Writer

  Last updated onUpdated January 16, 2024



Chelsea Krause is a writer who specializes in accounting, payroll, and small business loans. She has been with Merchant Maverick helping small business owners manage their finances since 2016. She is a QuickBooks Certified User and former eCommerce store owner. Her accounting expertise has been quoted in Forbes and her work appears in Startup Nation, Small Business Bonfire, and Women on Business. Chelsea graduated summa cum laude with a BA in English & Creative Writing from George Fox University and studied abroad at the University of Oxford as well. She currently resides in Boise, Idaho.

REVIEWED BY

Chelsea Krause Chelsea Krause is a writer who specializes in accounting, payroll, and small business loans. She has been with Merchant Maverick helping small business owners manage their finances since 2016. She is a QuickBooks Certified User and former eCommerce store owner. Her accounting expertise has been quoted in Forbes and her work appears in Startup Nation, Small Business Bonfire, and Women on Business. Chelsea graduated summa cum laude with a BA in English & Creative Writing from George Fox University and studied abroad at the University of Oxford as well. She currently resides in Boise, Idaho.

Lead Staff Writer

Cost segregation is a tax strategy that has the potential to lower the tax liability of property owners by thousands of dollars. A cost segregation study is critical to cashing in on these savings. Because of the level of expertise required to complete these studies, property owners need to hire a cost segregation company.

A cost segregation company specializes in assessing property components for accelerated depreciation, which minimizes tax liabilities for real estate owners. Some companies may also offer additional tax credit services to help businesses save even more on their income tax returns. In this post, we’ve selected the best cost segregation companies to help you accelerate depreciation on your commercial or investment property.

Learn More About Our Top Picks

Read more below to learn why we chose these options.

The 6 Best Companies For Cost Segregation

The best cost segregation companies can provide cost segregation studies that maximize accelerated depreciation while staying compliant with tax codes. KBKG, Omega Accounting Solutions, and Engineered Tax Services top our list for their experience with cost segregation, solid reputations within the industry, and availability of additional tax credit services.

• KBKG: Best Overall Cost Segregation Services
• Omega Accounting Solutions: Best For Additional Tax Credits
• Engineered Tax Services: Best For Large Properties
• CSSI: Best For Small Properties
• Duffy+Duffy: Best For LEED-Certified Projects
• Madison SPECS: Best For Remote Studies

Quick Comparison Of Cost Segregation Companies

KBKG: Best Overall Cost Segregation Services

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Omega Accounting Solutions: Best For Additional Tax Credits

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Engineered Tax Services: Best For Large Properties

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CSSI: Best For Small Properties

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Duffy+Duffy: Best For LEED-Certified Projects

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Madison SPECS: Best For Remote Studies

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Cost Segregation Review Methodology

We spend hours researching and evaluating each cost segregation company we review at Merchant Maverick, placing special emphasis on key characteristics to generate our service provider ratings.

When rating cost segregation companies, we use an 18-point rubric that looks at features, fees, customer service, and user reviews. We weigh each section differently to calculate the total star rating.

• Features: 50% of the total star rating
• Fees: 35% of the total star rating
• Customer Service: 10% of the total star rating
• User Reviews: 5% of the total star rating

Each section is further broken down into granular, weighted subsections, in which we look at specific attributes, like whether a free initial analysis is available, which cost segregation resources are offered, and availability in all 50 states.

Learn more about how we rate cost segregation companies.

What Is Cost Segregation?

Cost segregation is a tax strategy for property owners and real estate investors. Without cost segregation, property is depreciated using the following timelines:

• Commercial Properties: 39 years
• Residential Properties: 27.5 years

Using cost segregation, components of the building are assessed and sorted into four categories:

• Land assets
• Buildings & structures
• Land improvements
• Personal property

After categorization, certain building components can be depreciated on an accelerated schedule of five, seven, or 15 years. This frontloading of depreciation lowers tax liability and (in some cases) may even result in a tax refund.

Components that are assessed and categorized may also be eligible for bonus depreciation, resulting in additional tax benefits.

In order to use this tax strategy, a cost segregation study by an experienced team of professionals must be performed.

Who Qualifies For Cost Segregation?

Anyone who has purchased, constructed, or remodeled a commercial or residential investment property may qualify for cost segregation. This could be anyone from a retail store owner to a landlord who rents out a single-family home.

Primary residences do not qualify for cost segregation. In some cases, a second home may qualify provided certain conditions are met.

Reputable cost segregation companies offer a free feasibility analysis. During this step, an expert will perform an analysis of the property and your tax situation to determine if you qualify for cost segregation. Following this analysis, you’ll receive an estimate of tax benefits as a result of a cost segregation study, as well as a quote for study fees.

Some companies may have limitations on the properties they work with (i.e., the property must be worth a minimum amount), so make sure to do your research or simply ask about these requirements before moving forward.

What Is A Cost Segregation Study?

A cost segregation study is performed by an experienced team of professionals that may include accountants, engineers, estimators, and tax experts. While it may be possible to do a cost segregation study yourself, we don’t recommend it since the process is complex and mistakes can result in big penalties from the IRS.

A study should be completed on any commercial or investment property that was recently acquired, built, or remodeled. While it’s advised to complete a study in the first year the property is put into service, look-back studies can be performed to help you retroactively claim depreciation.

How Do Cost Segregation Studies Work?

Before hiring a cost segregation company, it’s important to understand how a cost segregation study works.

During a cost segregation study, the property will be carefully analyzed and assessed. Building components will be sorted into four categories, which will determine the accelerated depreciation schedule for each component. These studies can be performed with an on-site team or remotely using various types of technology.

Once the property has been analyzed and all components have been categorized, you will receive a report. These reports (which are typically 30+ pages) include a list of categorized assets, photographs of the property, and references that substantiate the study. This information can then be used to report accelerated depreciation on your tax return.

What Costs Can Be Written Off On A Cost Segregation Study?

During a cost segregation study, building components are assessed and categorized into four categories. These categories determine the accelerated depreciation schedule used to write off each component.

The four categories of cost segregation are as follows:

• Personal property: Personal property depreciates over five or seven years. Examples of personal property include appliances, signage, furniture, office equipment, and machinery.
• Buildings & structures: Residential buildings and structures depreciate over 27.5 years if it’s a residential property or 39 years if it’s commercial property. This category includes the building itself, along with structural components such as roofs, concrete foundations and footings, floors, ceilings, windows, and doors.
• Land improvements: Land improvements depreciate over 15 years. Land improvements include landscaping, exterior lighting, parking lots, curbing, sidewalks, and fountains.
• Land assets: Land assets include land as well as site work used to prepare the land before construction. Land assets are not depreciable.

Is A Cost Segregation Study Worth It?

Should you do a cost segregation study? Before deciding, there are a few things to keep in mind.

One of the biggest drawbacks of cost segregation is its associated costs. On the lower end, cost segregation studies cost around $5,000. For larger, more complex properties, costs only continue to rise and can surpass $15,000.

While this upfront cost may be a deterrent for some property owners, the tax benefits that come from segregating costs can easily exceed this amount, with some owners seeing tens or hundreds of thousands of dollars in savings in just a few years.

However, cost segregation isn’t for everyone. Your property has to qualify, and if it does, you need to weigh out the benefits and drawbacks of cost segregation.

If you’re still on the fence, you can use our cost segregation calculator to see how much you could save or reach out to a reputable cost segregation company (start with the six on this list!) for a free feasibility analysis, which gives you a better idea of how cost segregation could benefit you.

How To Choose A Cost Segregation Company

Knowing how to choose a cost segregation company can prevent a lot of headaches (and potential IRS penalties) in the future. Doing your research is the most important step in choosing a cost segregation company. Look for reputable companies (like those on this list), read user reviews, and don’t be afraid to reach out to ask questions.

Take advantage of any free feasibility analysis that is offered by companies that spark your interest. Not only will this provide you with a quote for fees, but it will also give you an idea of the tax savings available to you.

Keeping an eye out for red flags is just as important when looking for a cost segregation company. If you’re asked for upfront fees, asked to pay contingent fees, or just have a feeling that something is off, keep searching. A cost segregation study is a big investment, and you want to make sure you pick the right company for the job.

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