How much does a cost segregation study cost?

Cost segregation studies can generate tens or even hundreds of thousands in tax savings, depending on your property type, size, and value, but how much do they cost? 

In order to know you’ll get a positive ROI, it’s important to figure out how much a cost segregation study is going to set you back. However, it’s not so easy to simply look up the price online. Most cost segregation firms will want to get more information from you and provide a price based on how complex your study is going to be. 

In this article, we’ll break down the expected costs into three tiers that give you a better understanding of how much you can expect to spend on cost segregation.

What are cost segregation study costs?

First, let’s discuss the costs that go into creating a cost segregation study. There are two general cost centers: gathering the information and crunching the numbers. 

The first step, gathering the information, is often done by a team of engineers who photograph and measure every piece of your property during an onsite visit. For many properties, this amount of detail isn’t necessary, as you or your CPA can gather this information without the help of engineers or even doing a site visit. 

The second step, crunching the numbers, is where a CPA goes through all of the different components of your property and figures out if they qualify for accelerated depreciation of either 5, 7, or 15 years. There are now automated software solutions that can bring down the cost of crunching numbers. With these tools, you or your CPA simply input the information gathered from step one into the software, which then automatically generates the cost segregation study report. 

The cost you’re given by the cost segregation service you choose will depend on these two costs combined. The more involvement you have in each step, the more your study will cost. 

Let’s break this down into three tiers.

Tier 1 – Full engineering team on a complex property

Cost: $10,000-$25,000+

If you have a somewhat complex and large property, you may decide that you want the full engineering team to come to measure and photograph everything to make sure you leave no stone unturned. Then, you’ll have a CPA run the numbers to make sure every component is depreciated correctly. 

The cost of this type of more complex study would normally start around $10,000 and could go beyond $25,000 for a large enough property. This is the price that large organizations will typically pay for larger properties. 

Tier 2 – Less complex properties

Cost: $5,000-$10,000

If you have a smaller commercial property but still want the full engineering team and CPA involvement, you can choose to go that route. Many smaller property owners consider this out of their price range, but they can expect to pay between $5,000-$10,000 for this tier 2 study, which has the same level of expertise as tier 1 but less complexity and involvement required. 

Tier 3 – DIY/Automated

Cost: $1,000-$5,000

In a DIY/Automated study, you collect the information on your property yourself instead of outsourcing that work to a team of engineers. This is generally reserved for smaller or less complex properties, as they don’t require as much engineering expertise to determine the necessary variables. 

After finding the information you need on your own, you can then send this information to a CPA to complete the study or upload the information to a software system that automatically crunches the numbers and sends you a report. Using a software system will put you on the lower end of the $1,000-$5,000 tier 3 price range while using a CPA will put you on the higher end. 

For example, if you have a rental property, you can use our sister software, Rental Property Refund, to input the information on your property and get an automated cost segregation report for just $1,499. This fully automated solution is only available for rental properties, as they are generally less complex and don’t require CPA involvement.

An alternative option for commercial property cost segregation savings

For more complex commercial properties, Commercial Property Refund is your one-stop solution. We help you and/or your CPA gather all the information you need for your cost segregation study, then use a proprietary software to generate the cost segregation report. We then have our expert team review the report for accuracy. 

Interested in how much you could save with a cost segregation study? Check out our commercial property refund calculator for a free tax savings estimate. 

About Author

Richard Bourgault

Graduating from Georgia Tech with a degree in Electrical Engineering, Richard has gained over a decade of expereince in Cost Segregation coupled with software UX.

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