Cost Segregation Study
You're depreciating your building over 39 years. Components of it qualify in 5, 7, and 15.
If your business owns or has purchased commercial real estate, a cost segregation study reclassifies components of that property into shorter depreciation schedules — accelerating deductions you are already entitled to but deferring to the wrong timeline.
5–15%
Of a commercial property's value typically reclassifiable in year one
5, 7, 15
Year depreciation schedules vs. 39 years for the building
Look-back
Studies can be applied retroactively to prior-year properties
$0
Cost to determine if you qualify
Who This Is For
If your business owns commercial real estate purchased, constructed, or renovated you are almost certainly leaving depreciation on the table.
CFOs and business owners who own commercial property typically depreciate the entire building on a 39-year straight-line schedule. This is the default IRS treatment not the optimal one. A cost segregation study identifies building components that qualify for 5-, 7-, or 15-year depreciation schedules and reclassifies them, accelerating the deductions you are already entitled to.
This is not a gray area of tax law. Cost segregation is an IRS-recognized methodology documented in the IRS Cost Segregation Audit Techniques Guide the same guide the IRS uses when auditing studies. The question is not whether cost segregation works. The question is whether your CPA has done it.
Our Cost Segregation Specialist Partner
You will work with elite cost segregation specialists engineers and CPAs with deep expertise in IRS-compliant cost segregation methodology. Opscale Exchange connects you to this team. They perform the study.
Depreciation Schedules — What Changes
Who Qualifies
- Your business owns commercial or investment real estate
- Property was purchased, constructed, or renovated for $500,000 or more
- You have taxable income to absorb accelerated deductions (or will)
- No prior cost segregation study has been performed on this property
Property Types That Qualify
If it's commercial real estate your business owns, it qualifies for a study. The property type determines the reclassification opportunity.
Office Buildings
Tenant improvements, HVAC zones, specialized electrical
Medical & Dental
Lab plumbing, specialty lighting, procedure room finishes
Retail & Restaurant
Decorative fixtures, specialty flooring, display lighting
Warehouses & Distribution
Dock equipment, specialized lighting, flooring systems
Manufacturing Facilities
Process piping, specialty electrical, compressed air systems
Hotels & Hospitality
FF&E, specialty plumbing, decorative elements
Auto Dealerships
Specialty lighting, lifts, compressed air, showroom finishes
Mixed-Use & Multifamily
Common area improvements, specialty systems
Self-Storage Facilities
Security systems, specialty doors, lighting controls
Real Results
Real Results from Our Trusted Specialist Partner
The studies below were completed by our trusted specialist partner licensed engineers and CPAs. Opscale Exchange connects you to this team. They perform the study.
Real Results
$85M Regional Mall
- Texas
A prominent real estate developer sought to maximize tax savings and optimize cash flow on a large regional mall. Our trusted specialist partner’s licensed engineers and CPAs identified eligible assets across plumbing, HVAC, parking infrastructure, cabinetry, and specialty fixtures, reclassifying them from the 39-year default into 5-, 7-, and 15-year schedules. Every position was prepared and documented by a founding member of the American Society of Cost Segregation Professionals.
$85M
Property value
$85M
Property value
$M+
Immediate tax savings unlocked
Key Outcome
Accelerated depreciation deductions enhanced mall cash flow, enabling reinvestment into the property. All positions were upheld through IRS audit examination.
Short-Term Rental
$400K Short-Term Rental
- Milwaukee, WI
A real estate investor purchased a short-term rental property and engaged our specialist partner team to maximize first-year depreciation. Their licensed CPAs and engineers identified and reclassified appliances, furniture, fixtures, and improvements — generating outsized first-year deductions relative to the property cost.
$400K
Purchase price
$120K
Additional year-one depreciation
$48K
Additional cash flow, year one
Key Outcome
Accelerated depreciation deductions enhanced mall cash flow, enabling reinvestment into the property. All positions were upheld through IRS audit examination.
Industrial / Manufacturing
$2.8M Manufacturing Plant
- Los Angeles, CA
A business owner had been depreciating an owner-occupied industrial manufacturing plant on a standard 39-year schedule for several years before engaging our specialist partner. Their licensed engineers and CPAs reviewed structural components, electrical systems, HVAC units, and process-specific assets — recovering all missed depreciation from prior years through a formal accounting method change (Form 3115). No amended returns were required.
$2.8M
Purchase price
Look-back
Retroactive study missed years recovered
Form 3115
Accounting method change no amended returns
Key Outcome
All previously unclaimed depreciation was captured in a single year through the accounting method change. Substantial immediate tax savings and improved cash flow were realized without amending prior returns.
What Businesses Get Wrong
The default depreciation schedule is not the only option. Most businesses just don't know that.
Four patterns account for most of the cost segregation opportunity that businesses leave on the table year after year
01
1
Depreciating everything at 39 years
The IRS default for commercial real estate is a 39-year straight-line schedule. It’s not a requirement — it’s a starting point. Most businesses accept it without knowing that components of the same building qualify for 5-, 7-, and 15-year schedules.
2
Missing the look-back opportunity
Cost segregation studies can be applied retroactively. A business that purchased a property five years ago and never performed a study can still capture the reclassification opportunity — without filing amended returns. Most businesses assume the window has closed. It hasn’t.
02
3
Overlooking renovations and improvements
Tenant build-outs, equipment installs, and capital improvements all generate their own reclassification opportunity. Each renovation is treated as a separate property for depreciation purposes — and each is eligible for its own cost segregation study.
03
4
Timing the study wrong
A study performed after year-end for the prior tax year still captures most of the value. A study performed before a property is sold can affect the tax treatment of the gain. Timing matters — and so does knowing when not to wait.
04
The Opportunity Cost
Every year on the default 39-year schedule is a year of accelerated depreciation you will never get back. The study is not a one-time decision it is a decision with a deadline.
Bonus depreciation rates have been stepping down since 2023. The interaction between cost segregation and bonus depreciation is where most of the first-year value lives and that interaction changes with each tax year. A study filed now reflects the rates still available.
Why Businesses Stall
The hesitation is almost always the same. And it consistently costs more than the study would have.
CFO assumes CPA would have recommended a study if one were warranted.
Most CPAs are generalists. Cost segregation requires an engineering study — it is outside the scope of a standard CPA engagement unless specifically requested. The assumption that “my CPA would have told me” is the most expensive assumption in commercial real estate.
Waiting until year-end to evaluate depreciation strategy.
Depreciation strategy is not a year-end exercise. A study initiated in Q3 captures the same value as one initiated in Q1. Waiting until December creates execution risk without tax benefit.
Not knowing if enough taxable income exists to absorb the deductions.
Accelerated deductions require taxable income — or a plan for it. The eligibility review includes a preliminary assessment of absorptive capacity. If the deductions exceed current income, the excess carries forward.
Property was purchased years ago — assumes the window has closed.
The look-back provision allows a cost segregation study to be applied to properties owned for years — sometimes decades — without filing amended returns. The window has not closed.
Renovation was completed — new reclassification opportunity not flagged.
Every major renovation creates a new cost segregation opportunity independent of the original property study. If your CPA did not flag it, it was likely not within the scope of the engagement.
Assumes cost segregation is only for large portfolios or REITs.
Studies are available on a contingency basis starting at $500K property cost. The fee structure is tied to the outcome — not the size of the portfolio.
How It Works
From your profile to a filed cost segregation study four steps.
The process is designed to be low-friction. You provide the property information. The specialists handle the engineering, IRS filings, and audit defense.
Step 1
Tell us about your property
Submit your property address, acquisition date, cost basis, and any major renovation history. The intake form takes approximately ten minutes. No financial statements or tax returns are required at this stage.
01
Step 2
Specialists assess your opportunity
A cost segregation specialist reviews your property profile and prepares a preliminary opportunity estimate — the projected reclassification amount and associated deductions. This step is at no cost.
02
Step 3
We perform the engineering study
If you proceed, specialists conduct the full engineering analysis — component identification, cost allocation, and IRS-compliant documentation. The study typically takes two to four weeks.
03
Step 4
We file and defend
The completed study is delivered to your CPA for integration into your tax return. If the IRS audits the study, your specialist team provides full audit defense at no additional cost.
04
A Differentiator Worth Knowing
Cost segregation studies create deferred tax benefit. Opscale Exchange can put a portion of that value in your hands before the IRS processes the return.
Tax Benefit Advances
For qualifying engagements, Opscale Exchange offers access to a portion of the projected tax benefit before the IRS finishes processing. This is not a loan against the refund it is an advance against the confirmed deferred benefit, structured in coordination with your CPA and the study team. Ask about availability during the eligibility review.
Get Started
The hesitation is almost always the same. And it consistently costs more than the study would have.
The eligibility review is at no cost. A specialist will review your property profile and provide a preliminary estimate of reclassifiable value. No financial statements or tax returns required.
Eligibility
$0 upfront. Pay nothing until your refund arrives.
There is no upfront fee for the study. Compensation is structured as a percentage of the confirmed tax benefit — agreed at intake and fixed before the study begins. If there is no benefit, there is no fee.
$0
Cost for eligibility review
$0
Upfront cost contingency only
Contingency
% of tax benefit confirmed at intake
$500K+
Minimum property cost
Common Questions
What CFOs and property owners ask before starting.
We've owned our building for years. Is it too late?
No. The look-back provision allows a cost segregation study to be applied to properties owned for many years — in some cases decades — without filing amended returns. The mechanism is a Form 3115 change in accounting method, which captures the cumulative catch-up deduction in the current tax year. The window is not closed. It is open until you sell the property or it is fully depreciated.
How much of a property's value is typically reclassifiable?
The reclassification percentage depends on property type, construction year, and renovation history. As a general range, 20–40% of a commercial property’s depreciable basis is typically reclassifiable into 5-, 7-, or 15-year schedules. Office buildings tend to be at the lower end. Manufacturing, medical, and restaurant properties tend to be at the higher end. The preliminary estimate from the eligibility review will reflect your specific property profile.
What is bonus depreciation and how does it interact with cost segregation?
Bonus depreciation allows assets with a recovery period of 20 years or less to be deducted in full in the year placed in service — rather than over the recovery period. When combined with cost segregation, reclassified components that would otherwise depreciate over 5, 7, or 15 years can instead be deducted immediately. This is where most of the first-year value in a cost segregation study comes from. Bonus depreciation rates have been stepping down since 2023. A study filed now reflects the rates still available.
Does a cost segregation study increase audit risk?
Cost segregation is an IRS-recognized methodology with its own Audit Techniques Guide — the document the IRS uses when auditing studies. A properly documented study performed by qualified engineers does not meaningfully increase audit risk relative to a standard commercial real estate return. Every study delivered through Opscale Exchange includes full audit defense at no additional cost.
We renovated after purchasing. Does the renovation qualify separately?
Yes. Capital improvements and renovations are treated as separate placed-in-service events for depreciation purposes. If a renovation was completed after the original acquisition — even years later — it is eligible for its own cost segregation study, independent of whether a study was performed on the original property. The renovation opportunity is frequently overlooked.
Can I access my tax benefit before the IRS finishes processing?
For qualifying engagements, Opscale Exchange offers access to a portion of the confirmed deferred benefit before the return is fully processed. This is not a refund anticipation loan — it is an advance against the confirmed study outcome, structured in coordination with your CPA. Availability and structure are confirmed during the eligibility review.
You own the property. Find out how much depreciation you've been leaving on the table.
The eligibility review costs nothing and gives you a preliminary view of your reclassification opportunity.
The eligibility review is at no cost and provides a preliminary estimate of reclassification opportunity. It is not a guaranteed outcome, a tax opinion, or a commitment to perform a study. Actual reclassification amounts depend on property-specific engineering analysis. Opscale Exchange is not a tax advisor. Consult your CPA or tax attorney regarding the application of cost segregation to your specific situation.