Considering cost segregation for your commercial or investment real estate? The best cost segregation companies help you reap the most tax benefits while remaining compliant with IRS guidelines.
WRITTEN & RESEARCHED BY
Editor & Senior Staff Writer
Last updated onUpdated
REVIEWED BY
Expert Contributor
Cost segregation is a tax strategy that has the potential to lower the tax liability of property owners by thousands of dollars. A cost segregation study is critical to cashing in on these savings. Because of the level of expertise required to complete these studies, property owners need to hire a cost segregation company.
A cost segregation company specializes in assessing property components for accelerated depreciation, which minimizes tax liabilities for real estate owners. Some companies may also offer additional tax credit services to help businesses save even more on their income tax returns. In this post, we’ve selected the best cost segregation companies to help you accelerate depreciation on your commercial or investment property.
Learn More About Our Top Picks
| Company | Best For | Next StepsBest For |
|---|---|---|
KBKG
 |
|
|
Omega Accounting Solutions
 |
|
|
Engineered Tax Services
 |
|
|
CSSI
 |
|
|
Duffy+Duffy
 |
|
|
| Show More Options | ||
Madison SPECS
 |
|
|
| Show Fewer Options |
Read more below to learn why we chose these options.
Table of Contents [hide][show]
Table of Contents
The best cost segregation companies can provide cost segregation studies that maximize accelerated depreciation while staying compliant with tax codes. KBKG, Omega Accounting Solutions, and Engineered Tax Services top our list for their experience with cost segregation, solid reputations within the industry, and availability of additional tax credit services.
| Company | Best For | Free Feasibility Analysis | Additional Tax Credits |
|---|---|---|---|
| KBKG | Overall best for cost segregation | ||
| Omega | Business tax credits & incentives | ||
| Engineered Tax Services | Larger properties | ||
| CSSI | Small properties | ||
| Duffy+Duffy | LEED-certified projects | ||
| Madison SPECS | Remote studies |
Pros
Cons
The number of resources alone made KBKG worthy of being on this list. Free tax calculators, tax software, a broad array of tax credit services, and years of industry experience only add to why this company is the overall top cost segregation choice. KBKG goes the extra mile by providing excellent customer support. The company has a solid number of online reviews -- something we rarely see with cost segregation companies. Beyond that, the reviews are overwhelmingly positive, with clients praising the company's team for professionalism, responsiveness, and the quality and timeliness of completing cost seg studies.
Pros
Cons
With 15 years of tax experience, Omega Accounting Solutions offers several services surrounding tax credits and incentives to help you get the most out of your next tax return. From cost segregation to ERC, Omega provides free consultations and easy, secure processes for claiming deductions and credits. Omega also offers many other business and financial services you won't find with other cost segregation companies. Omega does all of these things and does them well, as indicated by the many positive reviews from satisfied clients.
Get Started With Omega Accounting Solutions
Pros
Cons
Similar to Omega Accounting Services, Engineered Tax Services offers cost segregation and a wide array of other specialty tax services, including ERC and R&D claims. Engineered Tax Services uses an engineering-based approach to cost segregation studies and has a proven track record of working with large businesses including Hilton, Marriott, and Toyota. Given its level of experience in the specialty tax space and the slew of positive customer reviews, businesses of all sizes -- especially large businesses or investors with multiple prices -- should feel comfortable utilizing ETS for its cost segregation and tax credit services.
Get Started With Engineered Tax Services
Pros
Cons
While CSSI doesn't offer numerous tax services, it puts its focus solely on cost segregation and has completed over 45,000 cost segregation studies to date. A free initial property analysis is available to help you realize tax benefits and receive a quote for CSSI's affordable services. While CSSI can handle large cost segregation studies, the company has lower property value limits than other companies and works with commercial properties valued from $200,000 to $1.5 billion.
Pros
Cons
Performing cost seg studies since 2002, Duffy+Duffy is an established company that focuses its attention solely on performing cost segregation studies without the distractions of other tax services. Duffy+Duffy has experience with LEED-certified properties, helping owners of sustainable businesses reduce their tax liabilities without overlooking depreciable costs. You won't find this kind of experience with just any cost segregation company, which is why Duffy+Duffy made this list.
Pros
Cons
Madison SPECs offers a unique Smart Tour where an on-site employee works with a Madison SPECS expert to perform a remote cost segregation study. Utilizing video and digital equipment, this Smart Tour is non-intrusive, offers faster turnaround times, and provides a video trail for the IRS. Since its founding, the company has helped clients of all sizes lower their tax liabilities by over $3 billion.
Get Started With Madison SPECS
We spend hours researching and evaluating each cost segregation company we review at Merchant Maverick, placing special emphasis on key characteristics to generate our service provider ratings.
When rating cost segregation companies, we use an 18-point rubric that looks at features, fees, customer service, and user reviews. We weigh each section differently to calculate the total star rating.
Each section is further broken down into granular, weighted subsections, in which we look at specific attributes, like whether a free initial analysis is available, which cost segregation resources are offered, and availability in all 50 states.
Learn more about how we rate cost segregation companies.
Cost segregation is a tax strategy for property owners and real estate investors. Without cost segregation, property is depreciated using the following timelines:
Using cost segregation, components of the building are assessed and sorted into four categories:
After categorization, certain building components can be depreciated on an accelerated schedule of five, seven, or 15 years. This frontloading of depreciation lowers tax liability and (in some cases) may even result in a tax refund.
Components that are assessed and categorized may also be eligible for bonus depreciation, resulting in additional tax benefits.
In order to use this tax strategy, a cost segregation study by an experienced team of professionals must be performed.
Anyone who has purchased, constructed, or remodeled a commercial or residential investment property may qualify for cost segregation. This could be anyone from a retail store owner to a landlord who rents out a single-family home.
Primary residences do not qualify for cost segregation. In some cases, a second home may qualify provided certain conditions are met.
Reputable cost segregation companies offer a free feasibility analysis. During this step, an expert will perform an analysis of the property and your tax situation to determine if you qualify for cost segregation. Following this analysis, you’ll receive an estimate of tax benefits as a result of a cost segregation study, as well as a quote for study fees.
Some companies may have limitations on the properties they work with (i.e., the property must be worth a minimum amount), so make sure to do your research or simply ask about these requirements before moving forward.
A cost segregation study is performed by an experienced team of professionals that may include accountants, engineers, estimators, and tax experts. While it may be possible to do a cost segregation study yourself, we don’t recommend it since the process is complex and mistakes can result in big penalties from the IRS.
A study should be completed on any commercial or investment property that was recently acquired, built, or remodeled. While it’s advised to complete a study in the first year the property is put into service, look-back studies can be performed to help you retroactively claim depreciation.
Before hiring a cost segregation company, it’s important to understand how a cost segregation study works.
During a cost segregation study, the property will be carefully analyzed and assessed. Building components will be sorted into four categories, which will determine the accelerated depreciation schedule for each component. These studies can be performed with an on-site team or remotely using various types of technology.
Once the property has been analyzed and all components have been categorized, you will receive a report. These reports (which are typically 30+ pages) include a list of categorized assets, photographs of the property, and references that substantiate the study. This information can then be used to report accelerated depreciation on your tax return.
During a cost segregation study, building components are assessed and categorized into four categories. These categories determine the accelerated depreciation schedule used to write off each component.
The four categories of cost segregation are as follows:
Should you do a cost segregation study? Before deciding, there are a few things to keep in mind.
One of the biggest drawbacks of cost segregation is its associated costs. On the lower end, cost segregation studies cost around $5,000. For larger, more complex properties, costs only continue to rise and can surpass $15,000.
While this upfront cost may be a deterrent for some property owners, the tax benefits that come from segregating costs can easily exceed this amount, with some owners seeing tens or hundreds of thousands of dollars in savings in just a few years.
However, cost segregation isn’t for everyone. Your property has to qualify, and if it does, you need to weigh out the benefits and drawbacks of cost segregation.
If you’re still on the fence, you can use our cost segregation calculator to see how much you could save or reach out to a reputable cost segregation company (start with the six on this list!) for a free feasibility analysis, which gives you a better idea of how cost segregation could benefit you.
Knowing how to choose a cost segregation company can prevent a lot of headaches (and potential IRS penalties) in the future. Doing your research is the most important step in choosing a cost segregation company. Look for reputable companies (like those on this list), read user reviews, and don’t be afraid to reach out to ask questions.
Take advantage of any free feasibility analysis that is offered by companies that spark your interest. Not only will this provide you with a quote for fees, but it will also give you an idea of the tax savings available to you.
Keeping an eye out for red flags is just as important when looking for a cost segregation company. If you’re asked for upfront fees, asked to pay contingent fees, or just have a feeling that something is off, keep searching. A cost segregation study is a big investment, and you want to make sure you pick the right company for the job.
Let us know how well the content on this page solved your problem today. All feedback, positive or negative, helps us to improve the way we help small businesses.
Give Feedback
Want to help shape the future of the Merchant Maverick website? Join our testing and survey community!
By providing feedback on how we can improve, you can earn gift cards and get early access to new features.
Help us to improve by providing some feedback on your experience today.
The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.
Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.
