Many assume their accountants handle depreciation, and usually they do. Commercial buildings go onto the books at 39 years; residential rentals at 27.5 years. And that is where things end. Cost segregation studies differ. They involve taking a building apart “on paper” and finding those components that are classified to have shorter useful lives than the building itself. These include appliances, carpeting, decorative lighting, fencing, paving, and landscaping and are typically classified to be depreciated over periods of 5, 7, and 15 years, thereby moving deductions up into the first few years of ownership.

The IRS has published guidelines, found within Publication 5653, defining what a valid cost segregation study includes. Specifically, the first of thirteen elements of a quality study described in this document is preparation by someone with experience in two areas: the construction process and the tax law governing property classification. That is why most accounting firms, including sizable ones, send this work out rather than doing it in-house.

What Your Accountant Still Has To Do

Completing a cost segregation study does not complete the process. A tax return needs to reflect the changes made from the study.

In most cases for new property purchased this year, this is straightforward. Your preparer simply applies the new asset life spans and continues with preparing the return. When dealing with property that has been owned for multiple years, there may need to be a change of accounting method on Form 3115 filed with the IRS. As part of this filing, you are allowed to claim depreciation you should have claimed in prior years as a single catch-up adjustment in lieu of making amendments to past returns.

Therefore, it is important how the handover happens. If the provider sends you a PDF copy of the study and then vanishes, your accountant will need to recreate a fixed asset schedule from scratch. On the other hand, if the provider provides you with a completed fixed asset schedule that is easily usable by your accountant, and will also communicate directly with your accountant regarding any issues associated with your return’s examination, your accountant will save time they could charge you for.

One caveat. Creating a deduction and being able to use it are not the same thing. Passive activity rules, your tax bracket, and recapture on sale all bear on the result, so take your own advice before counting on anything.

Questions Worth Asking Before You Sign

Before signing any agreement with a cost segregation company, you should ask:

Who prepares the study?
What qualifications do they possess?
What is included in the deliverable?
Is it simply a report, or does the report accompany a depreciation schedule that your accountant can use?
Will they assist in filing Form 3115 for older properties?
Who will respond to any questions or concerns raised by the IRS if your return is audited, and how long will this support last?

Lastly, request a written estimate of the fees.

R.E. Cost Seg: Best For A Study That Lands Ready To Use On Your Accountant’s Desk

R.E. Cost Seg has completed over 15,000 studies since 2022 and works with more than 400 CPA, tax advisory, and real estate firms through a formal partner program with its own advisor portal. Every study finishes with a PDF report and an Excel fixed asset schedule written for your accountant, and the firm offers Form 3115 preparation for properties bought in earlier years. Audit support is included at no extra charge, and free proposals arrive within 24 hours.

Capstan Tax Strategies: Best For Accountants Who Want To Learn The Subject Properly

Cost Segregation Studies offered by Capstan Tax Strategies, an engineering-led specialty tax firm located in Dresher, PA, clearly state that their number-one priority is the client-CPA relationship. Their unique aspect is Capstan University, monthly webinars with CPE credit through NASBA-certified presenters, who cover topics such as cost segregation, research and development credits, and energy incentives.

If your accountant wants to learn how/why something is being done versus simply accepting the figures given to them at face value, then this could be helpful.

MSC: Best For Audit Cover That Does Not Expire

MSC (formerly known as MS Consultants) was established in 1996 and has performed over 26,500 studies. As a result of completing so many studies, MSC is considered one of the most experienced, independent providers of cost segregation services available today. More than 600 CPA firms utilize the service provided by MSC. The firm offers complimentary lifetime audit protection; handles all inquiries and documentation regarding the study; prepares and signs the IRS Form 3115, instead of having your preparer do these items. Site visits are done in person, and its partners have served as federal court expert witnesses.

Engineered Tax Services: Best For Licensed Engineers On Staff

Engineered Tax Services was started in 2001 and is a professional engineering firm, not an accounting firm with an internal engineering group. They state they have performed over 10,000 cost segregation, 179D, and R&D engagements per annum. Their team includes registered engineers, LEED-accredited experts, and Certified Public Accountants (CPA). Engineered Tax Services was established primarily to serve CPA firms and their clients instead of trying to compete with these same firms. They run a referral program for CPA firms that wish to offer cost segregation services to their own clients but would prefer not to perform the technical side of this work themselves.

Source Advisors: Best For Owners With More Than One Incentive In Play

Source Advisors is a national tax consulting firm specializing in niche tax areas. The company began practicing in specialty taxes in 1983 and acquired Bedford Cost Segregation in May 2021, giving it one of the largest teams of specialists working in cost segregation today. Alongside cost segregation, Source Advisors’ team provides expertise related to Research & Development (R&D) credits, the 179D energy deduction, 45L and LIFO inventory, allowing property owners claiming multiple incentives to keep all their incentive-related matters consolidated at one location. Additionally, the team at Source Advisors includes many members who hold certifications issued by the American Society of Cost Segregation Professionals.

KBKG: Best For Small Properties Where A Full Study Is Overkill

KBKG is a national tax consulting firm that specializes in providing advisory and compliance services across a range of tax specialties including income taxation and depreciation. KBKG has been a provider of specialty tax services since 1999. While KBKG does provide traditional engineered studies similar to those offered by other firms mentioned here, its most compelling offering for small property owners is software. As part of its offerings in November 2025, KBKG introduced Cost Seg Pro, available at CostSegregation.com. This web-based tool allows users to generate a completed cost segregation study report (ready-to-file) within minutes, beginning at $495, using data about residential and commercial buildings with a total depreciable tax basis of $1.5 million or less, excluding land. Reports include the Section 481(a) adjustment figure your preparer needs for Form 3115, plus audit support. Run it free and pay once you have seen the numbers.

Final Thoughts

While each of the six firms reviewed above can deliver high-quality work that will withstand review and scrutiny by government auditors, the differences lie in what ultimately ends up on your accountant’s desk after receiving a study report from one of these firms.

If you want the specialist to handle the engineering, the paperwork, and the conversation with your accountant, R.E. Cost Seg is the best option. A partner network of more than 400 firms, a fixed asset schedule your accountant can actually use, Form 3115 preparation on the same job, audit support included, a cost proposal inside 24 hours. Cost segregation is one part engineering and one part filing, and this is a firm set up to carry both.

Disclosure: This is a collaborative post.