Cost Segregation is a powerful tool for real estate owners to defer taxes. With our state-of-the art, computer-modeled cost segregation studies, we turn complex property costs into straightforward deductions.

This service offers data-driven modeled cost segregation reports and fully engineered reports. The data-driven model specialize in residential properties such as single family homes, condos, multi-family (2-4 units), townhomes, and cabins. All other property types can submit their details to receive a proposal with their estimated results, cost, and payback ratio.

Data-Driven Model:

This is a hybrid report that combines a client questionnaire, online property records, and our proprietary engineering model to generate a high-quality, cost-effective, instant report. Once you submit your questionnaire, we aim to deliver reports within 3 business days. For more details, please refer to the FAQ section on ""What is the Data-Driven Model?""

Fully Engineered Report:

This is a standard cost segregation report. To complete the process, you only need to provide supporting documents (e.g., closing statement, construction costs) and complete a virtual site inspection. Typically, we deliver fully engineered reports within 2-4 weeks after receiving the completed site inspection and necessary documents. For more details, please refer to the FAQ section on ""What is the Fully Engineered Report?""

STR Cost Seg offers free audit protection. If the IRS ever questions our studies, we’ll provide a fully engineered study for you for free.

Simply let us know and we’ll setup a virtual site visit and provide the necessary calculations and proof in no time!

The “Data Driven Model” is our proprietary engineering modeled report utilizing property data, and reviewed by engineers. This report will be processed and delivered within 3 business days of completing the property questionnaire.

The study is completed using client-provided details, online property records, and internal engineering. Once we receive payment, the remainder of the form becomes available based on the selections you made. For example you will be asked to enter or verify the data we have instantly populated for property characteristics related to size, number of beds, baths, appliances included in the purchase, flooring, and more. Once you have submitted your details the property is processed through our model and reviewed by one of our engineers who will cross reference your provided data, online records, and historical averages to ensure accuracy.

The end result is a breakdown of the cost basis of your property into the identified building components, their book value, and recovery periods. As an example, we determine the total cost of cabinetry, rather than the quantity in linear feet of cabinets.

Once we have completed this process (approximately 3 business days), you will receive two files.

Narrative Final Report- This is a PDF that outlines your results, the property details, our methodology, and the approach to identifying and reconciling cost in accordance with the standards outlined in IRS publication 5353. The intent is to provide detailed documentation to highlight the 13 characteristics of a quality cost segregation study.

Fixed Asset Schedule & Depreciation Schedule- The first sheet of this excel file is the fixed asset schedule. This provides your CPA with exactly what you need to calculate depreciation. The second sheet includes the depreciation schedule for each asset identified. This document breaks your property down into each building component with its associated; book value, placed in service date, recovery period, GDS depreciation conventions, applicable bonus depreciation rate, and the default and irrevocable depreciation method elections (200% declining balance, 150% declining balance, and straight line). The depreciation schedule shows the depreciation you will take for each asset, year after year. For capital improvements, that have been placed in service after the initial property was placed in service, you will just need to add the date these assets were placed in service in the fields that say “ENTER DATE”, then the depreciation will be calculated automatically. We are proud to provide clients and CPAs with tools that go far beyond the support most providers offer.

The “Fully Engineered Report” is a typical cost segregation report. This option requires submitting supporting documents and completing a virtual site inspection.

We typically complete the reports within 2-4 weeks of receiving all requested documents and completing the virtual site inspection.

How does it work?

Once we receive payment you will be directed to your client portal. Here you will be able to upload the requested documents and view our calendar to book your virtual site inspection.

Requested Documents:

Most clients will not have all of the requested documents. The list below indicates the documents that are required.

Closing Statement (required)
Construction Cost (required if you made improvements or new construction)
Appraisal
Site Survey
Photos

Virtual Site Inspection:

You will be able to book a time to complete the virtual site inspection. We recommend using someone who is familiar with any improvements that may have been made to the property. The virtual site inspections typically take 30-45 minutes to complete using your/your property managers cell phone.

Deliverables:

The end result is a breakdown of the cost basis of your property into the identified building components, their book value, and recovery periods. As an example, we determine the quantity and unit of measurement for all building components and assets within your property.

The deliverables are as follows:

Narrative Final Report- This is a PDF that outlines your results, the property details, our methodology, and the approach to identifying and reconciling cost in accordance with the standards outlined in IRS publication 5353. The intent is to provide detailed documentation to highlight the 13 characteristics of a quality cost segregation study.

Fixed Asset Schedule & Depreciation Schedule- The first sheet of this excel file is the fixed asset schedule. This provides your CPA with exactly what you need to calculate depreciation. The second sheet includes the depreciation schedule for each asset identified. This document breaks your property down into each building component with its associated; book value, placed in service date, recovery period, GDS depreciation conventions, applicable bonus depreciation rate, and the default and irrevocable depreciation method elections (200% declining balance, 150% declining balance, and straight line). The depreciation schedule shows the depreciation you will take for each asset year after year. For capital improvements that have been placed in service after the initial property was placed in service you will just need to add the date in the fields that say “ENTER DATE” then the depreciation will be calculated automatically. We are proud to provide clients and CPAs with tools that go far beyond the support most providers offer.

We do not provide tax filing services or advice. We provided an engineered product that determines the assets that make up your property and their respective cost and recovery periods to be used by your tax professional.
As a courtesy to your CPA we provide a fixed asset and depreciation schedule that includes a complete list of the assets and building components and their respective:

● Book Value
● Client Provided Placed in Service Date
● Recovery Period
● GDS depreciation convention (mid-month, mid-quarter, half-year) and methods (200% DB, 150% DB, SL)
● Applicable, year 1 bonus depreciation
● Depreciation expense for each year of the recovery period.

In other words, it provides the CPA with all of the information necessary to help you develop the best strategy to manage your depreciation expense. We do not offer strategic tax planning or tax services at this time.

Repairs, the cost of furniture, and standard maintenance are not considered to be improvements to the property.
The IRS defines improvements as:

A betterment, adaptation, or restoration of the property that:

1. Results in a material increase in the property's value or adapts the property to a new or different use;
2. Restores the property to a like-new condition after the end of its economic useful life; or
3. Represents a significant improvement to the property's efficiency or productivity.

This could be replacing floors, kitchen and bathroom remodels, HVAC, roofing, additions, shelving, doors, windows, trim, paint, drywall, new electrical fixtures, outlets, electrical panels, plumbing fixtures.

When you reach the final page of the form on the website we provide categories for you to enter your improvement costs.

Please note that if you are unsure about the benefits of cost segregation you should contact your CPA and assess your unique situation.

The Internal Revenue Service (IRS) considers the "placed in service" date of a property as the date when the property is ready and available for its specific use, typically when it is ready to be used in the ordinary course of business. It signifies the point at which the property is considered to have been placed into active use or service.
The placed in service date is significant for tax purposes, particularly for determining depreciation and other tax deductions or credits related to the property. The specific rules for determining the placed in service date may vary depending on the type of property and the applicable tax regulations.

For example, for real property such as buildings or structures, the placed in service date is generally the date when the building or structure is substantially complete and ready for its intended use. This means that it is in a state of readiness and available for occupancy, even if minor finishing touches or nonessential elements are not yet completed.

It's important to note that specific circumstances or tax regulations may introduce additional factors that could affect the determination of the placed in service date. Therefore, if you have a specific property or tax situation in mind, it is advisable to consult with a tax professional or refer to the relevant IRS guidelines to ensure accurate determination of the placed in service date.

We are not land appraisers and are not able to allocate a value to your land.
Our preferred method to allocate land value is based on county assessments. We determine the percentage the county used in their land value calculation and apply that same percentage to your current purchase price.

When completing the form you may notice above the land value field the word “caution”. In this instance we have used the industry standard of 20% land value. Please read the helpful hint by selection "caution".

We strongly recommend working with a professional, such as a licensed tax professional in your jurisdiction, to determine the correct land allocation to use for the study.