anyone use costsegregation.com ?
Member since 2022 · 15 posts · 1 vote
anyone use costsegregation.com ?
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Jason MalabuteBusiness Member
Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 898 votesI have not used that particular firm either, so I cannot speak to them, but here is how I would think about picking one. There is no IRS rule requiring a licensed engineer or a site visit, so nobody can tell you a study is automatically invalid based on who prepared it. What matters is whether it is defensible. A solid study inspects the property, pulls the actual construction or closing documents, classifies the assets with real cost support behind them, explains its methodology, handles indirect costs, and reconciles back to actual project costs or, on an acquisition, to the purchase price properly allocated after backing out land. Cheap online or questionnaire only studies tend to get thin in exactly those spots, and since the burden of substantiating your basis and classifications sits with you rather than the provider, that is where it costs you if it ever gets examined. Practically, I would ask any provider for a sample deliverable on a property similar to yours and check whether those pieces are actually in there before you look at price at all. Whether a study makes sense for your building comes down to your own facts, so run it by your CPA or tax advisor before you commit.
Malabute & Company CPAs525 Reviews
4 Replies
- Accountant · We serve all 50 states · Member since 2015 · 90 posts · 50 votes4w
I haven’t personally worked with CostSegregation.com, so I can’t speak to their service specifically. However, when our Clients are considering a Cost Segregation Study, we always recommend working with a physical engineering-based company that dispatches licensed engineers to the Property.
These studies can be a great tool to general huge tax savings when implemented correctly, but the IRS doesn't just give those savings away for free, you have to have substantial back-up, so we recommend our Clients against online services. You can DM for a recommendation for a good cost seg study company that works in all 50 states.
- 3wAaron WeikleBusiness MemberMember since 2026 · 76 posts · 23 votes
I've never used that specific firm, but here's how I'd evaluate any cost segregation provider before handing over money. I would ask them for a sample study on a property similar to yours and not a marketing one-pager. A real study will break components into 5, 7, and 15 year MACRS classes with specific line items. You should see concrete flatwork, electrical for equipment, land improvements, etc. and If it's vague or lumped together, I would walk away. The number that matters most is the 5 and 15 year reclassification percentage. On a typical residential rental, you'd expect maybe 20-30% of the depreciable basis to get reclassified out of the 27.5 year bucket. Commercial varies more. If they're promising 40-50% on a vanilla SFR with no real specialty components, that's a big red flag. Ask directly if they defend audits and is it in writing? Some firms disappear after delivery. You want someone who'll sign the study and stand behind it if the IRS questions the asset classification on Form 4562. Also check whether they're engineering based or just doing a spreadsheet calculation. The IRS has challenged purely calculation based studies. An engineer who actually walked the property carries a lot more weight. With bonus depreciation phasing down (60% for 2024 and 40% for 2025 under current law), the timing pressure is real. So don't just pick whoever has the slickest website. Get references from their actual clients, not just testimonials on their homepage.
- Member since 2022 · 15 posts · 1 vote3w
Aaron, thanks for the great response! Yes all of these were good questions, and I did a bit of background on the company, its backed by KBKG, which appears to be a legit engineering firm with a lot of experience in the industry. On your suggestion i did get the Audit review in writing from them. Good call.
Going to pull the trigger on this first one and see how it goes. Just curious do you have a good CPA and /or bookkeeping firm you can recommend?
My current CPA does not appear to be well versed on these study's.
- 3wJason MalabuteBusiness MemberAccountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 898 votes
I have not used that particular firm either, so I cannot speak to them, but here is how I would think about picking one. There is no IRS rule requiring a licensed engineer or a site visit, so nobody can tell you a study is automatically invalid based on who prepared it. What matters is whether it is defensible. A solid study inspects the property, pulls the actual construction or closing documents, classifies the assets with real cost support behind them, explains its methodology, handles indirect costs, and reconciles back to actual project costs or, on an acquisition, to the purchase price properly allocated after backing out land. Cheap online or questionnaire only studies tend to get thin in exactly those spots, and since the burden of substantiating your basis and classifications sits with you rather than the provider, that is where it costs you if it ever gets examined. Practically, I would ask any provider for a sample deliverable on a property similar to yours and check whether those pieces are actually in there before you look at price at all. Whether a study makes sense for your building comes down to your own facts, so run it by your CPA or tax advisor before you commit.
Malabute & Company CPAs525 Reviews
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