Cost Segregation
Accelerate depreciation and improve cash flow on your real property investments.
Most property owners depreciate their buildings as a single asset over 27.5 or 39 years. A cost segregation study identifies components within a property that qualify for shorter depreciation lives of 5, 7, or 15 years, moving significant deductions from future decades into the early years of ownership.
With 100% bonus depreciation now permanently restored for properties acquired, constructed, or renovated after January 19, 2025, the near-term tax value of a well-executed study has increased considerably.
Cost segregation applies across virtually any property type and owner, from real estate investors and developers to manufacturers, residential rentals, hospitality businesses, healthcare facilities, and retailers that own their buildings. It is relevant for newly constructed or acquired properties, for properties placed in service within the last 15 years, and for buildings undergoing renovation or expansion.
How a Cost Segregation Study Works
A cost segregation study is an engineering-based analysis of a property’s construction or acquisition costs. Rather than treating a building as a single depreciable asset, the study identifies land improvements and personal property embedded within the building systems. These components are then reclassified into shorter-lived asset categories. Indirect costs such as development, architectural, and engineering fees can also be allocated, further increasing the depreciable basis of the short-term assets.
For properties placed in service in prior years, a look-back study captures missed depreciation and partial disposition opportunities through an accounting method change, with the cumulative catch-up adjustment taken on the current return without requiring amended filings.
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BPM’s Cost Segregation Services
Our cost segregation services are delivered by specialists who produce engineering-based studies that are property-specific, rigorously documented, and built to withstand IRS scrutiny:
Engineering-based Study
Component-level analysis of acquisition, construction, and leasehold improvement costs to identify assets eligible for accelerated depreciation
QPP Analysis & Documentation
Mapping production and non-production areas of manufacturing facilities and substantiating QPP elections
Look-back Studies
Retrospective analyses on prior-year acquisitions or construction projects to capture missed depreciation through a current-year catch-up adjustment
Partial Disposition Analysis
Identifying retired or replaced asset components to claim deductions for remaining undepreciated basis
New Construction & Renovation Support
Integrating cost segregation into capital projects from the planning stage, and working with your contractor to ensure proper classification
Audit Support
Documentation and representation in the event of IRS review, including responding to examiner inquiries and substantiating asset classifications
BPM’s cost segregation professionals work alongside our Real Estate Industry Group, pairing deep real estate expertise with technical rigor. Contact us to see if your property is a candidate for a study.
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Looking for a team who understands where you’re headed and how to help you get there? Whether you’re building something new, managing growth or preserving success, let’s talk.