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Cost Segregation Services

Cherry Bekaert’s Cost Segregation Services team helps commercial and residential property owners accelerate depreciation, cut tax liability and capture expanded savings.

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What Is a Cost Segregation Study?

A cost segregation study is an engineering-based tax analysis that identifies building components eligible for accelerated depreciation. Cherry Bekaert examines a property in detail and reclassifies assets from the standard 39-year (commercial) or 27.5-year (residential) recovery period into shorter five, seven and 15-year periods.

Cost segregation studies deliver the most value on buildings recently constructed, acquired or significantly renovated — though properties placed in service in earlier years also qualify. With a reputable provider like Cherry Bekaert, reclassification defers tax, frees up near-term cash flow and produces deductions built to survive Internal Revenue Service (IRS) scrutiny. Done improperly, it creates exposure.

The permanent return of 100% bonus depreciation and the new Qualified Production Property (QPP) regime mean a rigorous study now unlocks far larger first-year deductions — and a weak one leaves far more on the table. Cherry Bekaert’s combined engineering-and-tax approach is built to capture the full benefit.

Working With Cost Segregation Professionals: Key Benefits

Cherry Bekaert’s Cost Segregation Services team helps owners and investors unlock hidden tax value in real estate — accelerating depreciation, improving cash flow and correcting prior tax inefficiencies through a defensible, IRS-compliant study. With 100% bonus depreciation and QPP now in play, the upside has never been greater.

  • Decreased Tax Liabilities

    By accelerating depreciation deductions, a cost segregation study can significantly reduce taxable income — lowering overall tax liability and, in some cases, the effective tax rate.

  • Lower Estimated Tax Payments

    Larger depreciation deductions reduce current-year taxable income, letting taxpayers lower quarterly estimated payments and improve short-term liquidity.

  • Accelerated Depreciation

    Cost segregation reclassifies eligible components into shorter recovery periods, so taxpayers deduct more depreciation earlier and capture the time value of money.

  • Increased Cash Flow

    By freeing capital that would otherwise go to taxes, a study improves cash flow that can be reinvested in operations, property improvements or growth.

  • Corrected Misclassified Assets

    A study identifies and corrects previously misclassified assets, letting taxpayers claim catch-up depreciation on missed deductions from prior years — without amending returns.

  • Deductions for Retired Components

    When components such as lighting, flooring or HVAC systems are retired or replaced, a study supports writing off their remaining basis instead of depreciating assets no longer in service.

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Why Choose Cherry Bekaert for Cost Segregation

A cost segregation study is only as good as the deductions that can be defended. As automated and AI-only providers flood the market with cut-rate studies, the gap between a number on a spreadsheet and a result that survives IRS review has never been wider.

Cherry Bekaert pairs licensed engineers with experienced tax professionals, so every study is rigorous, property-specific and integrated with your broader tax strategy. Our Tax Credits & Incentives Advisory professionals:

  • Apply a detailed, engineering-based methodology consistent with the IRS Cost Segregation Audit Techniques Guide — studies built to withstand scrutiny.
  • Break your building into units of property under the tangible property regulations, giving you clear direction on future capitalization and expensing.
  • Coordinate the study with every related incentive — 100% bonus depreciation, QPP, energy deductions and credits, such as Section 179D, and the disposition of retired assets.
  • Stand behind every study with audit-ready documentation and audit defense support.

We deliver this rigor at competitive, transparent pricing, and every engagement starts with a feasibility analysis — so you see the expected return before spending a dollar. With Cherry Bekaert, you get a national engineering-and-tax practice without overpaying for it.

Not All Cost Segregation Studies Are Equal

When a cost segregation study is improperly executed, it can create costly consequences. When deductions are disallowed on audit, the bill — back taxes, interest and penalties — often dwarfs the savings the study promised. 

Here is how an engineering-based Cherry Bekaert study compares with a typical low-cost or AI-only alternative:

  Cherry Bekaert — Engineering-based Study Low-cost / AI-only Study
Methodology Detailed engineering-based approach with a property review, consistent with the IRS Cost Segregation Audit Techniques Guide. Automated estimates or AI-generated templates with limited property-specific analysis.
Professionals Licensed engineers working alongside experienced tax professionals. Software output with limited specialist review.
Tax integration Coordinated with 100% bonus depreciation, QPP, energy incentives and your overall tax position. Standalone calculation — broader opportunities often missed.
Audit readiness Audit-ready documentation, with audit defense support if the IRS has questions. Limited documentation and little or no audit support.
Risk Built to withstand IRS scrutiny. Higher risk of disallowed deductions, back taxes, interest and penalties.
Value Competitive, transparent pricing scoped to your property — preceded by a free feasibility analysis so you know the ROI before you commit. Low sticker price, but a disallowed study can cost far more than it saved.

Cherry Bekaert competes on price — but never at the expense of a study you can stand behind.

How Much Could You Save With a Cost Segregation Study?

Every property is different, and so is every tax outcome. Start with a feasibility analysis and see exactly what a cost segregation study could return to your business. 

Our team will provide unbiased guidance on the practicality of a cost segregation study. If the numbers don’t work in your favor, we’ll tell you — many low-cost providers won’t.

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Our Cost Segregation Study Process

Every Cherry Bekaert study follows the same disciplined, engineering-based process — the rigor the IRS expects.

Feasibility Analysis

Every engagement starts with a complimentary feasibility analysis. We evaluate the property and available data to estimate the tax benefit and confirm a study will deliver a meaningful return.

Documentation

Our consultants gather and review the key records — appraisals, closing statements, construction documents, blueprints, site plans and vendor invoices — that make the analysis defensible.

Site Inspection

Our team inspects the property to identify and document its components, materials and systems. For manufacturing facilities, this is to map production versus non-production areas.

Cost Allocation and Asset Classification

Using IRS-approved methodologies and an engineering-based approach, we assign costs to specific components and classify them into the correct recovery periods.

Final Detailed Report

The study concludes with a comprehensive, audit-ready report — asset classifications, supporting documentation and depreciation schedules designed to withstand IRS scrutiny.

File Changes

For properties placed in service in a prior, already-filed tax year, we prepare Form 3115 to implement a “look-back” study, capturing missed depreciation without amending prior returns.

Feasibility Analysis

Every engagement starts with a complimentary feasibility analysis. We evaluate the property and available data to estimate the tax benefit and confirm a study will deliver a meaningful return.

Documentation

Our consultants gather and review the key records — appraisals, closing statements, construction documents, blueprints, site plans and vendor invoices — that make the analysis defensible.

Site Inspection

Our team inspects the property to identify and document its components, materials and systems. For manufacturing facilities, this is to map production versus non-production areas.

Cost Allocation and Asset Classification

Using IRS-approved methodologies and an engineering-based approach, we assign costs to specific components and classify them into the correct recovery periods.

Final Detailed Report

The study concludes with a comprehensive, audit-ready report — asset classifications, supporting documentation and depreciation schedules designed to withstand IRS scrutiny.

File Changes

For properties placed in service in a prior, already-filed tax year, we prepare Form 3115 to implement a “look-back” study, capturing missed depreciation without amending prior returns.

Architects collaborating over blueprint

The Ideal Time for a Cost Segregation Study

The year a property is placed in service is the ideal time for a cost segregation study — but buildings placed in service in earlier years are also strong candidates. The IRS catch-up provision lets owners claim missed depreciation without amending a return.

The opportunity is exceptional right now. 100% bonus depreciation is permanently restored for qualifying assets placed in service after January 19, 2025. And the new QPP rules open a limited window — generally for projects with construction beginning after January 19, 2025, and before January 1, 2029, and placed in service before January 1, 2031. For manufacturers, acting inside these windows can mean expensing much of a facility immediately instead of over 39 years.

Don’t leave those savings unclaimed. Cherry Bekaert can tell you quickly whether your timing works.

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Qualified Production Property: A New Asset Class for Manufacturers

The One Big Beautiful Bill Act created one of the biggest depreciation opportunities in decades for U.S. manufacturers. New Internal Revenue Code Section 168(n) treats QPP as a separate asset class, letting taxpayers immediately expense 100% of the production-use portion of a nonresidential building — costs otherwise depreciated over 39 years.

For the first time, the building shell and core of a qualifying facility — not just its equipment and finishes — can be deducted in the year it is placed in service.

What Qualifies as QPP

QPP is nonresidential real property used by the taxpayer as an integral part of a qualified production activity — the manufacturing, production or refining of tangible personal property — involving a substantial transformation of the product. Key requirements include:

  • Construction must begin after January 19, 2025, and before January 1, 2029.
  • The property must be placed in service in the United States before January 1, 2031.
  • The taxpayer must make a QPP election.
  • Non-production space — offices, administrative areas, lodging, sales, and research and engineering — does not qualify and remains 39-year property.
  • Certain acquired buildings not used in a qualified production activity between January 1, 2021, and May 12, 2025, may also be eligible.
  • Recapture rules apply: if the property stops being used in a qualified production activity within 10 years, the deduction may be recaptured as ordinary income.

Why Cost Segregation Is Essential to a QPP Claim

QPP and cost segregation work hand in hand. Only the production-use portion of a building qualifies, so someone has to determine, document and defend exactly how much of the facility is integral to production. That is what an engineering-based cost segregation study does — and why a QPP claim is only as strong as the study behind it. Cherry Bekaert’s Cost Segregation team uses the study to:

  • Map the facility into qualifying production areas and excluded non-production areas.
  • Substantiate the QPP deduction with engineering analysis, floor plans and production-flow documentation.
  • Apply 100% bonus depreciation to short-life components in the remaining non-production portion of the building.
  • Deliver audit-ready documentation supporting both the QPP election and bonus depreciation deductions.

The result can be a first-year deduction far larger than a traditional study alone — but the documentation bar is much higher. Engage a QPP-aware cost segregation team during design and construction, not after the facility is placed in service. Cherry Bekaert has the engineering and tax knowledge to get it right the first time.

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Types of Real Estate Eligible for Cost Segregation

Most newly constructed, renovated or acquired income-producing commercial and residential properties — typically with a depreciable cost basis starting in the range of $200,000 to $500,000 or more — are good candidates for cost segregation. Eligible property types include, but are not limited to:

  • Multi-family apartments and residential units
  • Industrial, manufacturing and specialized production facilities
  • Hotels, restaurants and hospitality properties
  • Retail spaces and shopping centers
  • Professional and medical office buildings
  • Warehouses and distribution centers
  • Agricultural structures

Manufacturing, production and refining facilities deserve particular attention: beyond a traditional cost segregation study, these properties may now qualify for QPP treatment, allowing the production-use portion of the building to be expensed immediately.

Case Study

Cost Segregation for a Medical Real Estate Company

Learn how our cost segregation studies helped a large medical real estate acquirer receive more than $25 million in additional first-year depreciation deductions.

Read the Case Study

Our Professionals

Connect With Us

Martin Karamon headshot

Martin Karamon

Tax Credits & Incentives Advisory Leader

Partner, Cherry Bekaert Advisory LLC

Daniel Hurtado

Cost Segregation Leader

Tax Credits & Incentives Advisory
Director, Cherry Bekaert Advisory LLC

Cost Segregation Advisory FAQs

What are cost segregation services?

Cost segregation services involve a detailed, engineering-based analysis of a property to identify and reclassify eligible building components into shorter tax recovery periods. This accelerates depreciation deductions and reduces tax liability, with IRS-compliant documentation to support the results.

Who can conduct a cost segregation study?

Cost segregation studies are typically performed by engineering firms, construction consultants or CPA firms. A multidisciplinary firm like Cherry Bekaert combines engineering experience with deep tax-technical knowledge for a more accurate, defensible result.

How should I choose a cost segregation provider?

Look for a provider that uses a detailed, engineering-based approach, follows the IRS Cost Segregation Audit Techniques Guide, reviews the property directly, involves CPAs and tax specialists, and provides audit defense and documentation support. The lowest price is rarely the best value — a study that cannot be defended can cost far more than it saved.

Are low-cost or automated cost segregation studies worth it?

A cost segregation study only delivers value if its deductions hold up under examination. The IRS Cost Segregation Audit Techniques Guide identifies a detailed, engineering-based study — including a review of the property — as the most accurate and reliable approach. Low-cost, automated or AI-only studies often rely on generic estimates and thin documentation, leaving deductions vulnerable on audit. Cherry Bekaert delivers engineering-based, audit-ready studies at competitive pricing, beginning with a feasibility analysis so you understand the return before you invest.

What is the cost of a cost segregation study?

The cost varies with property size, complexity, documentation availability and whether the study is performed retroactively. Because a well-executed study should return many times its cost, Cherry Bekaert provides a clear, no-obligation estimate up front and competitive, property-specific pricing. Be cautious of studies priced far below market; if the analysis is not defensible, disallowed deductions can cost far more than the study saved.

Can a cost segregation study help me claim 100% bonus depreciation?

Yes. 100% bonus depreciation applies to assets with a recovery period of 20 years or less. A cost segregation study identifies and reclassifies building components into five-, seven- and 15-year lives, making them eligible for full first-year expensing under the permanently restored 100% bonus depreciation rules.

What is Qualified Production Property (QPP), and how does it relate to cost segregation?

Qualified Production Property is a new asset class created by IRC Section 168(n) that lets taxpayers immediately expense 100% of the production-use portion of a nonresidential building used in manufacturing, production or refining — property normally depreciated over 39 years. Because only the production-use portion qualifies, a cost segregation study is essential: it maps and substantiates which areas of the facility are integral to production and provides the audit-ready documentation needed to support the QPP election.

Where can I find a cost segregation study provider?

Reliable providers are often found through professional services firms with specialized tax advisory practices, industry referrals, or firms that publish thought leadership and demonstrate experience aligned with IRS audit guidance. Cherry Bekaert’s Tax Credits & Incentives Advisory team is a nationally recognized cost segregation provider.

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