Cost Segregation Studies

What is a Cost Segregation Study?

Engineering-based cost segregation studies, performed by a top tax advisory service, is a tax planning tool that can dramatically lower the taxes tied to real estate. It’s based on a detailed process that identifies all the costs associated with a building’s purchase, construction, or renovation. Each cost identified is assigned its shortest possible recovery period per IRS guidelines. This allows owners to increase depreciation deductions, reduce their income tax liabilities and maximize cash flow from their real estate investment. Veritax’s cost segregations studies are and affordable investment for real estate investors, and yield large returns on investment


First, we’ll determine if your property is a good fit for a cost segregation study. We prepare an initial detailed no-cost analysis to determine the benefits of doing a study.

During that analysis, our team of tax and financial advisors make sure you meet all the minimum qualifications for a cost segregation study:

  • You have taxable income
  • You have purchased, constructed, or renovated (including tenant improvements) a commercial real estate property in the last 20 years
  • Your purchase or construction costs are $250,0000 or greater

Determine if you're a good fit


Once it is determined a study is warranted, we will begin requesting all appropriate documentation.

Common items you’ll be asked to provide are:

  • Construction drawings
  • Purchase agreements
  • Appraisals
  • Building plans
  • Data collection

Data collection


We will visit your property to determine the accuracy of the building plans and to identify the building components that qualify for a shorter recovery period. This is documented through measurements, pictures, and field notes.

Site Visit


All information is entered into a specialized engineering software that integrates the plans of the building and calculates the measurements and counts of all building components. We download the data into our powerful proprietary software that assigns pricing and recovery periods to each component.

All studies include a thorough review and documentation of the tax law that allows taxpayers to assign a building component to a shorter recovery period.



If the study is being done on a property that was constructed or purchased in a prior year, we will provide the appropriate information to file IRS Form 3115 (Change of Accounting Method).

Change of Accounting (if necessary)

Veritax accelerated $5 million in depreciation for the new owners of an apartment complex. Find out how.

Download the free Veritax case study to find out how cost segregation studies are an indispensable planning tool to lower taxes, increase cash flow and free up assets for additional investment.


Frequently Asked Questions
about Cost Segregation Studies

Most tax preparers depreciate equipment and other building costs (such as parking lots and carpeting) at 5, 7, or 15 years. Veritax Advisors cost segregation specialists are able to identify costs that can’t be readily seen, such as the wiring and plumbing needed to run the equipment. We have found that our process results in identifying costs that can be reclassified as 5-year, 7-year, and 15-year recovery periods that typically exceed 200 percent to 500 percent of what an accountant alone can capture.

No. You only need to file IRS Form 3115 (Change of Accounting Method) that allows you to take the “catch-up” depreciation in the year you wish to apply the study. We can assist your CPA in completing this form and will provide the appropriate supporting schedules.

In all of our projects, we prepare an initial detailed no-cost analysis to determine the benefits of doing a study. From this analysis we determine the cost of the study and then you can make a final decision whether a study would be beneficial to you. The study fee is 100 percent deductible and, from our experience, the benefit will be three to up to 25 times the cost of the study.

Yes, but it will take 27.5 or 39 years and you will miss the benefit of having additional cash flow to invest in your business now. With a cost segregation study, it is not unusual to generate $50,000-$200,000 of additional cash flow that is available to re-invest however you choose. The benefit will depend on the building complexity as well as the cost of the building.

Usually not. However, there are special rules that may apply in this situation and we can help you navigate those specific tax laws.

Contact Veritax Advisors today at or call 888-939-3309 to request your no-cost estimate.

You earn. Your client saves.

Ready to get started?

Book an introductory meeting with Veritax cost segregation expert Chris Ostler, CPA, to know more about cost segregation tax benefits along with getting introduced to the best cost segregation companies. We’ll get you started with a no-cost analysis to determine if the property is a good fit for a full study. No commitment is necessary.

We look forward to helping you serve your clients.

Have a question for Chris before booking? Reach out directly.

A. Chris Ostler, CPA

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