Expert Cost Segregation Services
Grade: C — Score: 55/100
R.E. Cost Seg leverages advanced technology to conduct cost segregation studies efficiently, utilizing virtual site visits to minimize travel and overhead costs. This innovative approach allows for quick assessments and maximizes client savings.
The workflow is streamlined into a simple four-step process: request a proposal, confirm property details, schedule a virtual site visit, and unlock tax savings. This ensures a hassle-free experience for clients, making it easy to navigate through the complexities of tax savings.
While R.E. Cost Seg provides significant benefits, clients should be aware of potential risks, such as discrepancies in asset classification or documentation requirements. The company offers audit support to mitigate these risks, ensuring compliance with IRS guidelines.
Rapid Report: Starting at $950 per study
Fully Engineered Study (Residential): Starting at $2,800 per study
Fully Engineered Study (Commercial): Starting at $3,325 per study
Consider switching to Cost Segregation Services, Inc.: Similar service offerings but may lack the virtual efficiency and audit support.
It depends on your tax situation. Industry consensus is that cost segregation starts making financial sense when the depreciable basis exceeds $250,000, though some high-income investors see ROI on properties as low as $100,000 if they qualify for Real Estate Professional Status or the short-term rental loophole. R.E. Cost Seg's Rapid Report starts at $950, so on a $400,000 property where the study identifies $100,000 in accelerated depreciation, a taxpayer in the 37% bracket would save roughly $37,000 in first-year taxes for a $950 investment. The free proposal from R.E. Cost Seg estimates your specific savings before you commit.
Yes. There is no time limit. R.E. Cost Seg offers Form 3115 (Application for Change in Accounting Method) preparation, which lets you claim all missed accelerated depreciation as a single catch-up adjustment in the current tax year without amending prior returns. This is called a look-back study. The catch-up deduction can be substantial since it captures every year of missed accelerated depreciation in one lump sum. R.E. Cost Seg prepares the Form 3115 as a standalone service or bundled with a new study.
Cost segregation is an IRS-approved strategy documented in the IRS Audit Techniques Guide. A properly executed, engineering-based study is not an inherent audit trigger. R.E. Cost Seg reports that less than 0.1% of their 15,000+ completed studies have been audited, and they maintain a 100% success rate in defending the audits that have occurred. The risk increases with poorly executed studies that skip site inspections, use template-based methods, or make aggressive reclassifications without engineering documentation. Every R.E. Cost Seg study includes audit support at no extra charge.
When you sell, the IRS requires depreciation recapture. Personal property identified through cost segregation (5- and 7-year assets) is recaptured at ordinary income tax rates up to 37%. Real property (15-year land improvements and remaining building) is recaptured at a 25% maximum rate. This does not erase the benefit of cost segregation since you had use of the tax savings for years before the sale, and the time value of that money is significant. Most sophisticated investors mitigate recapture through a 1031 exchange, which defers all recapture taxes. Planning for recapture at the time of the study, not at the time of sale, is critical.
The Rapid Report ($950+) is a self-directed option for residential properties up to 4 units with a depreciable basis under $800,000. You complete an online questionnaire (5-30 minutes), no site visit is needed, and delivery takes 5-10 business days. The Fully Engineered Study ($2,800+ residential, $3,325+ commercial) includes a virtual or in-person site visit with detailed quantity measurements and cost-per-unit analysis of every building component. It works for any property type or size with no value cap, and delivers in 15-20 business days. Both options are reviewed by an engineer, include IRS audit support, and are equally defensible.
No, but it significantly changes how much you benefit in year one. Without REPS, accelerated depreciation creates passive losses that can only offset passive income (like other rental income), not your W-2 or business income. Excess losses are suspended and carry forward until you have passive income or sell the property. With REPS (750+ hours/year in real estate, more than 50% of your working time), passive losses can offset ordinary income dollar-for-dollar. Short-term rental owners who materially participate may also qualify under the STR loophole to treat rental losses as non-passive, even without full REPS.
The One Big Beautiful Bill Act, signed January 19, 2025, reinstated permanent 100% bonus depreciation for qualified property placed in service after that date. This means all 5-, 7-, and 15-year assets identified in a cost segregation study can be fully deducted in the year the property is placed in service, rather than being spread over their recovery periods. For properties placed in service before January 19, 2025, the prior phase-down schedule still applies (60% in 2024, 40% from January 1-19, 2025). R.E. Cost Seg provides complimentary updates to depreciation schedules for studies completed before the law was signed if the property qualifies for the higher rate.
The Rapid Report takes 5-10 business days after you complete the online questionnaire and submit payment. The Fully Engineered Study takes 15-20 business days after all documents are received and the site visit is completed. The site visit itself (virtual via video call or in-person) typically takes 30-60 minutes. R.E. Cost Seg also offers a rush option with a 5-business-day turnaround, subject to capacity during peak tax season. The clock starts when all requested information and documentation has been received, so having your closing statement, depreciation schedule, and any cost ledgers ready speeds up the process.
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