Cost segregation study

General Real Estate Investing
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Cost segregation study

Stan Koper
Member since 2025 · 14 posts · 7 votes

First time owning operating an STR. Have had it since May 2025, and am learning now about the Cost Segregation. Anyone have any recommendations on companies that they've used and are reasonable.

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Jason MalabuteBusiness Member
Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 916 votes
6mo

Before locking in a firm, the better question to ask is whether a cost seg actually moves the needle for you this year. The deduction is powerful, but only if you can use the resulting losses — if your income picture doesn't allow you to absorb them now, they sit and get carried forward as suspended passive losses. A smart first step is asking a cost seg provider for a free estimate so you can see the rough benefit before paying for a full study. The quality of the report also matters because your CPA has to translate it into the return. From there, have your CPA model out the actual tax savings and confirm whether the losses are usable in the current year or pushed to a future one — that way the decision is driven by real numbers rather than the appeal of more depreciation. Every situation is different, so it's worth running this past your own CPA or tax advisor first.

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  • Denver McClurePro Member
    Financial Advisor · Flower Mound, TX · Member since 2018 · 661 posts · 480 votes
    6mo

    @Jeff Nash should be able to help.

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  • Jose OrtizBusiness Member
    Accountant · South Florida · Member since 2026 · 47 posts · 18 votes
    6mo

    Hi Stan,

    Congrats on your first STR. Good time to be looking into this.

    Quick tip before choosing a firm. As I tell my clients - don’t just ask “who should I use,” ask “will this actually benefit me this year?” A Cost Seg can be powerful, but only if you can use the losses.

    I usually recommend starting with an estimate first. I work closely with a really solid cost seg partner who can run a quick estimate so you can see the potential benefit before committing. As an aside -  I can't emphasize enough how important the quality of the cost seg reports are to a CPA who has to interpret the results and apply to your tax filing.

    From there, have your CPA model it out - run a few scenarios and see:

    1. How much tax you’d actually save, and

    2. Whether the losses are usable now or get carried forward

    That way you’re making a decision based on numbers, not just the idea of “more depreciation.”

    If you want, I’m happy to connect you with the group that I use - just shoot me a message.

    I hope that you found this valuable. 

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    6mo

    I would recommend Cssi. As Jose said, the order of operations do doing this is 

    1. connect with your cpa to ensure you qualify for STR loophole and document as part of that.

    2. Evaluate if this is a good year to get the cost seg done (will this save you the amount of tax you're wanting to. 

    3. Connect with cost seg company to get an estimate

    4. Evaluate estimate and proceed or not proceed (discuss with your cpa)

    [email protected]
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    • Account Closed
      Specialist · United States · Member since 2025 · 45 posts · 32 votes
      3mo
      Quote from @Aaron Zimmerman:

      I would recommend Cssi. As Jose said, the order of operations do doing this is 

      1. connect with your cpa to ensure you qualify for STR loophole and document as part of that.

      2. Evaluate if this is a good year to get the cost seg done (will this save you the amount of tax you're wanting to. 

      3. Connect with cost seg company to get an estimate

      4. Evaluate estimate and proceed or not proceed (discuss with your cpa)

      Aaron, thanks for the plug!
      1Reply
  • Julius VincentBusiness Member
    Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 157 posts · 172 votes
    6mo

    @Stan Koper - if the property value is north of $500K, I'd recommend CSA Partners. My clients have been extremely happy with their work, particularly on maximizing Year 1 depreciation. They're pricing is ~$3K-$4K.

    If your property value is south of $500K, you can get away with a DIY or software-based approach. I recommend RE Cost Seg for this; they're around ~$900 and do a fantastic job.

    [email protected]281-407-7353
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  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    6mo
    Quote from @Stan Koper:

    First time owning operating an STR. Have had it since May 2025, and am learning now about the Cost Segregation. Anyone have any recommendations on companies that they've used and are reasonable.

    Hey Stan, good move looking into cost seg early, it can be a big lever for STRs if you qualify. In terms of companies, a few that investors consistently mention are RE Cost Seg, CSSI, Seneca Cost Segregation, Engineered Tax Services, and Madison SPECS since they all do engineering-based studies and have nationwide coverage, which is what you want for audit protection. If your property is more in the STR or SFR range, there are also firms like SMF Cost Seg that focus specifically on smaller residential and Airbnb-style properties and tend to be more affordable with simpler processes. I'd just be careful about choosing purely on price, what really matters is that your CPA is comfortable with the report, the study is truly engineering-based and not a template, and they offer audit support if anything ever comes up, because that's usually where the cheaper options fall short.



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  • Stan Koper
    OP
    Member since 2025 · 14 posts · 7 votes
    6mo
    This is all new territory for me, and really appreciate all the recommendations! I have a call scheduled with RE Cost later to see what they offer
    2Reply
  • Fulton Abraham Sanchez
    CPA| New Clients Welcome| 50 States · Member since 2016 · 440 posts · 97 votes
    6mo

    @Stan Koper, hi. Look for an engineering-based cost seg study with audit support, that matters more than the firm name. Bigger firms are more conservative; mid-size firms balance cost and depth. Also, make sure your CPA knows how to apply it to your STR. And if the property value is low, the benefit may not justify the cost.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    6mo

    Hey Stan! You got some great answers above on the tax/CPA side of things from Jose and Aaron. And I saw that you've already reached out to a cost seg company, that's great! I just wanted to reiterate how important it is to make sure that it is applied correctly by your CPA. When a CPA isn’t very real estate-focused, or if you are doing taxes yourself, we often see mistakes like not coordinating cost seg with material participation rules (which can affect whether losses are fully usable), missing or misapplying bonus depreciation rules in the year the study is done,and not correctly breaking out and applying asset classes.

    Any of these can lead to you not getting the full benefit you paid for or worse, needing amendments later to fix it which can cost you $$$.

    So you’re definitely on the right path, just make sure your CPA is aligned with real estate strategy so everything is implemented correctly from the start. Happy to connect.

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  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 916 votes
    6mo

    Before locking in a firm, the better question to ask is whether a cost seg actually moves the needle for you this year. The deduction is powerful, but only if you can use the resulting losses — if your income picture doesn't allow you to absorb them now, they sit and get carried forward as suspended passive losses. A smart first step is asking a cost seg provider for a free estimate so you can see the rough benefit before paying for a full study. The quality of the report also matters because your CPA has to translate it into the return. From there, have your CPA model out the actual tax savings and confirm whether the losses are usable in the current year or pushed to a future one — that way the decision is driven by real numbers rather than the appeal of more depreciation. Every situation is different, so it's worth running this past your own CPA or tax advisor first.

    Malabute & Company CPAs527 Reviews
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  • David Casper
    Durango, CO · Member since 2026 · 6 posts · 0 votes
    6mo

    Happy to chat if you'd like. I work with CostSegRx and spend a lot of time specifically with STR owners, including first-time operators trying to determine whether cost segregation makes sense for their situation. We focus on detailed engineering-based studies that are built to be audit-ready and defensible, rather than the ultra-cheap automated reports that are becoming more common online.

    We’re also very competitively priced compared to many of the larger national firms, especially for STRs and smaller residential properties, so people are often surprised that they can still get a detailed engineering study without spending several thousand dollars.

    A lot depends on the property itself and the improvements that have been made, so it’s usually worth having an actual conversation before deciding whether it makes sense to move forward. Feel free to reach out if you’d like to discuss your property further. My contact information is in my signature.

    0Reply
  • Garrett CrosbyPro Member
    Real Estate Agent · Los Angeles, United States · Member since 2021 · 392 posts · 163 votes
    5mo

    Good call on the RE Cost Seg call — they're solid for the STR price range. One thing worth making sure your CPA confirms before the study: are you qualifying under the STR loophole (average rental period under 7 days, material participation) or under the Real Estate Professional status route? The answer determines whether you can use the bonus depreciation losses against W-2 or other active income in the current year or if they get suspended as passive losses. The cost seg itself is the same either way — it's the tax treatment that varies based on your specific situation.

    Also worth documenting your time spent managing the STR starting now if you haven't been — material participation requires 100 hours (or more than any other person) and that tracking can become important. Most people set this up after their first cost seg conversation and wish they'd started earlier. Happy to point you toward a good STR-focused CPA if your current one isn't specialized in this area.

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  • Account Closed
    Specialist · United States · Member since 2025 · 45 posts · 32 votes
    3mo

    To maximize the tax deferral benefit and keep yourself out of trouble with the IRS, be sure to work with a qualified firm that uses the Detailed Engineering Approach from Actual Cost Records or Detailed Engineering Cost Estimate Approach and strictly adheres to the 13 Principle Elements of a Quality Cost Segregation Study as outlined in IRS Publication 5653 (2-2025). Be sure to keep detailed records of improvements and FF&E purchases as these assets may be classified as 5-year property and eligible for bonus depreciation depending on the placed in service date.

    0Reply
  • Steven Ellis
    Specialist · Philadelphia, PA · Member since 2026 · 5 posts · 0 votes
    1w

    full disclosure, i own a cost seg firm called basis property group. you already have a pile of names above, so here's how i'd sort them. ask each one for a full sample report, the whole thing and not a summary page, and for the audit support terms in writing: who answers if an examiner has questions, and does it cost extra.

    a template that fills in percentages by property type is a different product from a study that breaks out the flooring, fixtures and site work. the irs audit techniques guide ranks the detailed engineering approach most reliable and rule of thumb percentages least, so that's the question to put to each firm.

    also pull your closing statement and any invoices for work since may. the bonus rule keys off the acquisition date, 100% for property acquired after jan 19 2025, and your cpa decides what applies to you.

    0Reply
  • Sagiv O.
    Real Estate Investor · Austin, TX · Member since 2017 · 132 posts · 33 votes
    1w

    For a first STR in this size range, the price question is straightforward — a study should be a few hundred dollars. We charge $525/unit at room42, full disclosure I run it, for an engineering-backed report built from your closing docs and photos.

    One thing none of the replies above mention: before you pay for a study, check what you already expensed. Small furnishings and equipment under $2,500 each can often be expensed outright under the de minimis safe harbor election, so they don't need to be in the study at all. What the study is really for is the bigger 5/7/15-year items — appliances, flooring, fixtures — and the 15-year land improvements like the driveway, walkways and landscaping, which are easy to miss on a single-family.

    And since you bought in May 2025: the study doesn't have to be done in the purchase year. If your 2025 return is already filed, a lookback study plus Form 3115 can pull the missed depreciation forward as a catch-up in the current year. Run the use of the loss by your CPA first — as others said, the STR material-participation test decides whether you can use it now or it carries forward.

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 4k+ votes
    1d

    First - You should consult with your accountant to determine if the cost segregation study will benefit you.
    Second - if the accountant mentions you would benefit, you should ask them which type of cost segregation study will be best suited for you.
    Depending on several factors, I will then recommend the three different types of studies(DIY, Hybrid or on-site engineered study).

    best of luck!

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