Cost Segregation Analysis for Southern California Real Estate Investors
Cost segregation accelerates depreciation on commercial and investment real estate — moving deductions from 27.5 or 39 years into 5, 7, and 15-year categories. For California investors, the result is additional deductions in the first year of ownership. We handle the tax analysis and coordinate the engineering study.
Without cost segregation, a $2M commercial property depreciates at roughly $51,000 per year over 39 years. With a study, 20–40% of that value may qualify for 5, 7, or 15-year depreciation — or under bonus depreciation rules, potentially full first-year expensing. That means a large block of accelerated deductions, creating a tax deferral whose value depends on your bracket. We confirm the study is worth its cost before you commit.
Cost Segregation — Full Service
Property Feasibility Review
We evaluate whether the tax benefit justifies the study cost based on property type, basis, your current tax situation, and bonus depreciation availability — before you spend money on an engineering study.
Engineering Study Coordination
We coordinate with qualified cost segregation engineers who perform the physical analysis and produce the IRS-defensible asset classification report. One point of contact throughout.
Tax Analysis and Return Integration
We review the engineer's component classifications, apply the correct depreciation methods and conventions, and integrate the results into your federal and California returns with full documentation.
Bonus Depreciation Application
We model the interaction between cost segregation, bonus depreciation, and your income to maximize the deduction benefit in the optimal year — accounting for passive activity rules and real estate professional status.
Form 3115 — Prior Year Catch-Up
If you have owned a property for years without a study, you can claim all prior missed deductions in a single year using a Form 3115 accounting method change — without amending prior returns.
Disposition and Recapture Planning
When you sell or exchange the property, accelerated depreciation creates recapture exposure. We plan the disposition strategy — including 1031 exchanges — to minimize recapture tax at sale.
A Feasibility Review Costs Nothing. We Check the Numbers First.
If cost segregation does not pencil out for your property, we tell you upfront.