--- title: What Is a Cost Segregation Study? description: Learn the advantages and disadvantages of a cost segregation study and how they can apply to your business. image: https://www.jec-llc.com/hubfs/What%20Is%20a%20Cost%20Segregation%20Study%3F.jpeg --- [Skip to content](https://www.jec-llc.com/blog/what-is-a-cost-segregation-study#main-content) [![cunningham-logo](https://www.jec-llc.com/hs-fs/hubfs/Logos/cunningham-logo.png?width=667&height=196&name=cunningham-logo.png) ![www.jec-llc.comhs-fshubfslogo (2)](https://www.jec-llc.com/hs-fs/hubfs/social-suggested-images/www.jec-llc.comhs-fshubfslogo%20(2).png?width=341&height=100&name=www.jec-llc.comhs-fshubfslogo%20(2).png) ](https://www.jec-llc.com) - Private Tax Advisory Show submenu for Private Tax Advisory - [ Private Tax Advisory ](https://www.jec-llc.com/private-tax-advisory) - [ The Private Tax Plan ](https://www.jec-llc.com/private-tax-plan) - [ Strategic Tax Projects ](https://www.jec-llc.com/strategic-tax-projects) - M&A Advisory Show submenu for M&A Advisory - [ C&A DealMakers ](https://www.jec-llc.com/sell-side-ma-advisory-for-business-owners-ca) - [ Are You Ready To Exit? ](https://www.jec-llc.com/business-exit-readiness) - [ Sell-Side Advisory ](https://www.jec-llc.com/what-is-sell-side-advisory) - [ Family Business Strategy ](https://www.jec-llc.com/family-business-strategy) - [ Big Beautiful Bill ](https://www.jec-llc.com/one-big-beautiful-bill-act) - About Us Show submenu for About Us - Our Approach Show submenu for Our Approach - [ Our Approach ](https://www.jec-llc.com/our-approach-eliminate-fragmentation-build-wealth-cunningham-associates) - [ Our Process ](https://www.jec-llc.com/our-process-tax-reduction) - [ Tax & Financial Analysis ](https://www.jec-llc.com/integrated-tax-and-financial-analysis) - [ About Us ](https://www.jec-llc.com/about-us) - [ Leadership ](https://www.jec-llc.com/about-us#Our-Leadership-Team) - [ Testimonials ](https://www.jec-llc.com/client-testimonials) - [ Careers ](https://www.jec-llc.com/careers) - [ Contact Us ](https://www.jec-llc.com/contact-us) - [ (508) 797-5003 ](tel:+15087975003) - Resources Show submenu for Resources - [ Tax Guides & Resources ](https://www.jec-llc.com/cunningham-associates-tax-guides-and-resources) - [ Success Stories ](https://www.jec-llc.com/success-stories) - [ Blog ](https://www.jec-llc.com/blog) - [ Video ](https://www.jec-llc.com/tax-advisory-video-gallery) - [ FAQs ](https://www.jec-llc.com/faqs) - Private Tax Advisory Show submenu for Private Tax Advisory - [ Private Tax Advisory ](https://www.jec-llc.com/private-tax-advisory) - [ The Private Tax Plan ](https://www.jec-llc.com/private-tax-plan) - [ Strategic Tax Projects ](https://www.jec-llc.com/strategic-tax-projects) - M&A Advisory Show submenu for M&A Advisory - [ C&A DealMakers ](https://www.jec-llc.com/sell-side-ma-advisory-for-business-owners-ca) - [ Are You Ready To Exit? ](https://www.jec-llc.com/business-exit-readiness) - [ Sell-Side Advisory ](https://www.jec-llc.com/what-is-sell-side-advisory) - [ Family Business Strategy ](https://www.jec-llc.com/family-business-strategy) - [ Big Beautiful Bill ](https://www.jec-llc.com/one-big-beautiful-bill-act) - About Us Show submenu for About Us - Our Approach Show submenu for Our Approach - [ Our Approach ](https://www.jec-llc.com/our-approach-eliminate-fragmentation-build-wealth-cunningham-associates) - [ Our Process ](https://www.jec-llc.com/our-process-tax-reduction) - [ Tax & Financial Analysis ](https://www.jec-llc.com/integrated-tax-and-financial-analysis) - [ About Us ](https://www.jec-llc.com/about-us) - [ Leadership ](https://www.jec-llc.com/about-us#Our-Leadership-Team) - [ Testimonials ](https://www.jec-llc.com/client-testimonials) - [ Careers ](https://www.jec-llc.com/careers) - [ Contact Us ](https://www.jec-llc.com/contact-us) - [ (508) 797-5003 ](tel:+15087975003) - Resources Show submenu for Resources - [ Tax Guides & Resources ](https://www.jec-llc.com/cunningham-associates-tax-guides-and-resources) - [ Success Stories ](https://www.jec-llc.com/success-stories) - [ Blog ](https://www.jec-llc.com/blog) - [ Video ](https://www.jec-llc.com/tax-advisory-video-gallery) - [ FAQs ](https://www.jec-llc.com/faqs) - [ Contact us ](https://www.jec-llc.com/contact-us) Open main navigation Close main navigation [ Contact us ](https://www.jec-llc.com/contact-us) [Cost Segregation](https://www.jec-llc.com/blog/topic/cost-segregation) # What Is a Cost Segregation Study? [mailto:?body=https://www.jec-llc.com/blog/what-is-a-cost-segregation-study](mailto:?body=https://www.jec-llc.com/blog/what-is-a-cost-segregation-study) ![What Is a Cost Segregation Study?](https://www.jec-llc.com/hs-fs/hubfs/What%20Is%20a%20Cost%20Segregation%20Study%3F.jpeg?width=950&name=What%20Is%20a%20Cost%20Segregation%20Study?.jpeg) ![Picture of Ryan Foley](https://www.jec-llc.com/hs-fs/hubfs/Untitled%20design%20(50).png?width=50&name=Untitled%20design%20(50).png) [ Ryan Foley ](https://www.jec-llc.com/blog/author/ryan-foley) Aug 8, 2023 8:45:00 AM 2 min. read Cost segregation studies are designed to benefit businesses that have bought, built, updated, or increased their real estate investments. How does this strategy work? It accelerates depreciation deductions, which helps defer state and federal income taxes.  By allocating all property-related costs into their appropriate property classes, a cost segregation study can help businesses save significant money.  ## How does a cost segregation study work? A typical [depreciation schedule](https://www.jec-llc.com/cost-segregation-services/) permits real estate depreciation over a long period of time—27.5 to 39 years. However, accelerated depreciation deductions allow the depreciation of certain assets in five, seven, or 15 years. If you’re unsure whether a cost segregation study is the right strategy for you, [contact our team today](https://www.jec-llc.com/cost-segregation-survey/) to identify whether or not any of your renovations qualify for an accelerated depreciation schedule.  [This method](https://www.forbes.com/sites/forbesfinancecouncil/2020/12/21/decreasing-your-tax-burden-with-a-cost-segregation-study/?sh=5f395432e1f2) segregates eligible real estate costs and expenses, potentially leading to significant financial savings for commercial property owners. Many different construction-related expenditures may qualify for accelerated depreciation. Eligible real estate costs typically involve a structure’s non-structural elements, land improvements, or indirect construction costs.  What are personal real estate assets? This type of asset typically includes items that aren’t viewed as necessary for a building’s overall operations and maintenance. This could include items like home appliances, furniture, equipment, and even vehicles that are used for business purposes. Eligible land improvement deductions may include a broad range of expenses, such as walkways, parking lots, driveways, fences, and landscaping. According to cost segregation tax regulations set forth by the IRS, businesses can separate landscape elements into different parts such as plants, rocks, trees, security lighting, and more.  ## What are the advantages of carrying out a cost segregation study? Now that you understand what a cost segregation study is, let’s take a closer look at some of the [advantages](https://www.jec-llc.com/blog/cost-segregation-analysis-things-your-business-needs-to-know) it may offer: ### 1. You can lower local realty-transfer taxes. A cost segregation study may reduce [local realty-transfer taxes](https://sharedeconomycpa.com/blog/can-cost-segregation-lower-taxes/) because local governments often assess these applicable fees based on a building’s fair market value. A cost segregation analysis lowers a building’s overall value, resulting in a reduction of applicable transfer taxes.  ### 2. You can increase cash flow. Analyzing expenses related to property renovations, construction, purchasing, and improvements will ultimately minimize taxable income. This means that less of your money will go toward paying local, state, and federal taxes.    ## What are the disadvantages of carrying out a cost segregation study? ### 1. A cost segregation study can be expensive. A cost segregation study can be expensive, costing anywhere from $10,000-$25,000. However, the price depends on the property’s age, location, type, and the time it takes to complete the study. [Segregating costs](https://www.rocketmortgage.com/learn/cost-segregation) isn’t the right strategy for every property, but it is likely worth it for buildings that are valued at more than $500,000. ### 2. Costs may not be straightforward. The process of separating eligible costs may not be simple or straightforward for business operators, depending on the type of building and property size. That’s why it’s extremely important to work with knowledgeable and experienced tax professionals who can help you make the right decision.    ## How do I know if cost segregation is worth it for my business? Cost segregation won’t be the right strategy for every business property, but this often-forgotten tax strategy has the potential to save you significant money, even up to thousands of dollars.  When it comes to cost segregation, it’s more important than ever to work with knowledgeable tax professionals. They can help you understand if it’s worth carrying out a cost segregation study on your commercial real estate property.   [![New call-to-action](https://no-cache.hubspot.com/cta/default/2785898/219d2fe3-67e5-41c2-854e-3fcd60910732.png)](https://cta-redirect.hubspot.com/cta/redirect/2785898/219d2fe3-67e5-41c2-854e-3fcd60910732)   ## Blog comments ## Related posts [![The Disadvantages of an S Corp Election](https://www.jec-llc.com/hs-fs/hubfs/Canva%20images/Canva%20Design%20DAF7S9rwvCY.png?height=500&name=Canva%20Design%20DAF7S9rwvCY.png) ](https://www.jec-llc.com/blog/the-disadvantages-of-an-s-corp-election) [Tax Savings](https://www.jec-llc.com/blog/topic/tax-savings), [Specialty Tax Credits](https://www.jec-llc.com/blog/topic/specialty-tax-credits), [Tax Strategies](https://www.jec-llc.com/blog/topic/tax-strategies), [Small Business](https://www.jec-llc.com/blog/topic/small-business), [Advanced Entity Structuring](https://www.jec-llc.com/blog/topic/advanced-entity-structuring) 3 min read. ## [The Disadvantages of an S Corp Election](https://www.jec-llc.com/blog/the-disadvantages-of-an-s-corp-election) [Liza Cunningham, CMA, EA](https://www.jec-llc.com/blog/author/liza-cunningham-cma-ea) Feb 22, 2024 8:53:46 AM [Read more](https://www.jec-llc.com/blog/the-disadvantages-of-an-s-corp-election) [![What Is Cost Segregation and Is It Worth It?](https://www.jec-llc.com/hs-fs/hubfs/AdobeStock_183694071%20(1)%20(1)-1-1-1.jpeg?height=500&name=AdobeStock_183694071%20(1)%20(1)-1-1-1.jpeg) ](https://www.jec-llc.com/blog/what-is-cost-segregation-and-is-it-worth-it) [Tax Strategies](https://www.jec-llc.com/blog/topic/tax-strategies), [Cost Segregation](https://www.jec-llc.com/blog/topic/cost-segregation) 3 min read. ## [What Is Cost Segregation and Is It Worth It?](https://www.jec-llc.com/blog/what-is-cost-segregation-and-is-it-worth-it) ![Picture of Tom Cunningham](https://www.jec-llc.com/hs-fs/hubfs/Tom%20Cunningham.png?width=50&name=Tom%20Cunningham.png) [Tom Cunningham](https://www.jec-llc.com/blog/author/tom-cunningham) Apr 22, 2023 8:03:07 PM Introduced by the Tax Reform Act of 1986, cost segregation is an often-overlooked tax strategy that... [Read more](https://www.jec-llc.com/blog/what-is-cost-segregation-and-is-it-worth-it) [![Avoiding Overpayment: Common Tax Mistakes Made by Seasonal Businesses](https://www.jec-llc.com/hs-fs/hubfs/Canva%20images/Canva%20Design%20DAGXg3Yo7x4.png?height=500&name=Canva%20Design%20DAGXg3Yo7x4.png) ](https://www.jec-llc.com/blog/optimizing-tax-strategy-for-seasonal-businesses-a-guide) [Tax Strategies](https://www.jec-llc.com/blog/topic/tax-strategies), [Small Business](https://www.jec-llc.com/blog/topic/small-business), [Executive Compensation Studies](https://www.jec-llc.com/blog/topic/executive-compensation-studies) 2 min read. ## [Avoiding Overpayment: Common Tax Mistakes Made by Seasonal Businesses](https://www.jec-llc.com/blog/optimizing-tax-strategy-for-seasonal-businesses-a-guide) ![Picture of Ryan Foley](https://www.jec-llc.com/hs-fs/hubfs/Untitled%20design%20(50).png?width=50&name=Untitled%20design%20(50).png) [Ryan Foley](https://www.jec-llc.com/blog/author/ryan-foley) Dec 10, 2024 8:57:58 AM [Read more](https://www.jec-llc.com/blog/optimizing-tax-strategy-for-seasonal-businesses-a-guide) [![Cunningham and Associates C&A](https://www.jec-llc.com/hs-fs/hubfs/Logos/cunningham-logo.png?width=667&height=196&name=cunningham-logo.png "Cunningham and Associates C&A")](https://jec-llc.com) linkedin-in icon - Private Tax Advisory - [Private Tax Advisory](https://www.jec-llc.com/private-tax-advisory) - [The Private Tax Plan](https://www.jec-llc.com/private-tax-plan) - [Strategic Tax Projects](https://www.jec-llc.com/strategic-tax-projects) - M&A Advisory - [C&A DealMakers](https://www.jec-llc.com/sell-side-ma-advisory-for-business-owners-ca) - [Are You Ready To Exit?](https://www.jec-llc.com/business-exit-readiness) - [Sell-Side Advisory](https://www.jec-llc.com/what-is-sell-side-advisory) - [Family Business Strategy](https://www.jec-llc.com/family-business-strategy) - [Big Beautiful Bill](https://www.jec-llc.com/one-big-beautiful-bill-act) - About Us - Our Approach - [Our Approach](https://www.jec-llc.com/our-approach-eliminate-fragmentation-build-wealth-cunningham-associates) - [Our Process](https://www.jec-llc.com/our-process-tax-reduction) - [Tax & Financial Analysis](https://www.jec-llc.com/integrated-tax-and-financial-analysis) - [About Us](https://www.jec-llc.com/about-us) - [Leadership](https://www.jec-llc.com/about-us#Our-Leadership-Team) - [Testimonials](https://www.jec-llc.com/client-testimonials) - [Careers](https://www.jec-llc.com/careers) - [Contact Us](https://www.jec-llc.com/contact-us) - [(508) 797-5003](tel:+15087975003) - Resources - [Tax Guides & Resources](https://www.jec-llc.com/cunningham-associates-tax-guides-and-resources) - [Success Stories](https://www.jec-llc.com/success-stories) - [Blog](https://www.jec-llc.com/blog) - [Video](https://www.jec-llc.com/tax-advisory-video-gallery) - [FAQs](https://www.jec-llc.com/faqs) ## Get the latest from C&A We care about the protection of your data. Read our [Privacy Policy](https://www.jec-llc.com/privacy-policy) ©2026 All rights reserved - [Terms of use](https://www.jec-llc.com/terms-conditions) - [Privacy policy](https://www.jec-llc.com/privacy-policy) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Ryan Foley", "url" : "https://www.jec-llc.com/blog/author/ryan-foley" }, "dateModified" : "2023-08-08T12:45:00.386Z", "datePublished" : "2023-08-08T12:45:00.000Z", "headline" : "What Is a Cost Segregation Study?", "image" : [ "https://www.jec-llc.com/hubfs/What%20Is%20a%20Cost%20Segregation%20Study%3F.jpeg" ], "mainEntityOfPage" : { "@id" : "https://www.jec-llc.com/blog/what-is-a-cost-segregation-study", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.jec-llc.com/hubfs/Logos/cunningham-logo.png" }, "name" : "Cunningham & Associates" } } ```