Can I do a cost segregation study on a property I bought years ago?

Yes. A look-back study on a property placed in service in an earlier year is applied by filing Form 3115, a change in accounting method, which takes the entire cumulative missed depreciation as a single catch-up adjustment in the current year. You do not amend prior returns to do it.

What does a cost segregation study cost?

Engineered studies on residential and small multifamily property generally run in the $5,000 to $15,000 range depending on property size and complexity, and the study is itself a deductible expense. The question that matters is not the fee but whether the property has enough reclassifiable basis to justify it, which is what a feasibility check answers before you commit.

Does a cost segregation study increase audit risk?

An engineering-based study following IRS Audit Techniques Guide methodology is a well-established, IRS-recognized procedure, not an aggressive position. What draws scrutiny is a study done without engineering support, or one whose conclusions were never carried correctly onto the return. That is why the study and the return should be handled by the same person.

Is cost segregation worth it on a smaller property?

Not always, and we will tell you when it is not. Below a certain basis the study fee eats the benefit. The feasibility check exists to give you that answer honestly before you pay for anything.

Free tool · For people who already own the building

Some of what you spent is still
sitting on your books.

Two deductions get missed more than any others by people who own rental property: depreciation nobody ever broke out, and the value of what you tore out during a renovation. Answer four questions and this tells you which one is still available to you, which one has already expired, and what to document before a contractor starts.

No email needed for the answer. Takes about thirty seconds.

The Basis Recovery Check

Four questions about your property.

1. What year did you buy it?

2. Roughly what did you pay?

Purchase price of the building, land included. A ballpark is fine.

3. Have you ever had a cost segregation study done on it?

4. Where are you with renovations?

Why these two get missed.

Deduction one

Depreciation nobody itemized

A building bought without a cost segregation study gets depreciated as one lump over 27.5 or 39 years. But the appliances, the flooring, the cabinetry, the site work and much of the electrical belong on far shorter schedules. Nobody separated them, so the faster deductions were never taken.

The part most owners don't know: you don't have to amend anything. A look-back study on a property you already own is claimed with Form 3115 as a catch-up in a single current tax year. Prior returns stay as filed.

How the look-back works →

Deduction two

The roof you threw away

When you replace a roof, a boiler, or a kitchen, the old one usually still has undepreciated basis on your books. You keep depreciating something that is physically in a dumpster, while also depreciating its replacement.

A partial asset disposition election writes off what's left of the old component. But it has to be made on a timely filed return for the year the work was done, which is why the year of your renovation matters more than the size of it.

How the disposition election works →

Educational only, not tax advice. Whether either deduction applies to you depends on your actual return, the property, how the work was contracted and documented, and current law. Amounts shown are directional estimates, not a study and not a promise. Matt Wessels, CPA signs the returns and confirms every number before anything is filed.

Want the real number instead of an estimate?

Twenty minutes on your last return and the property. You'll leave knowing whether a look-back study clears its own cost, whether a disposition election is still open to you, and what it's worth. If the answer is that it isn't worth doing, you'll hear that instead.

Book the free review →

If we can't find savings worth at least 3× the fee, you don't pay.

Some of what you spent is stillsitting on your books.