Has anyone ever used or heard of this company? Cost Segregation Guys

Question

My CPA told me to check out this company, but they claim to have been around for decades but only have a few trust pilot reviews... all in the last few months so I am unsure.

Has anyone ever heard or used them before? Or does anyone have a recommendation for a reputable online cost seg for my 400k duplex?

https://costsegregationguys.com/?gad_source=1&gbraid=0AA...

Nathan Resnick · Answer

@Bo Smith I'm a partner at Cost Segregation Guys, so I'm the interested party. Taking your post seriously rather than getting defensive about it.

The review pattern you flagged is a fair thing to flag. I'd tell my own mother to be suspicious of it. Where I'd push back is on the two conclusions.

On purchased reviews: every review on our profile is from a client with a corresponding engagement in our system. Trustpilot flags and strips solicited with incentive reviews, and our profile has been through their verification. The clustering is because we spent most of our history in the CPA referral channel, where the accountant does the vetting and nobody thinks to ask the property owner for a public review. When we started marketing directly to investors, we started asking. Boring explanation, but that's the one that's true.

If you want to check the harder thing, ask me for the name and credentials of the engineer who'd actually sign your report, and then go verify that person exists and holds what I say they hold. Shell operations fail that test immediately. It's the single best question to ask any firm in this space, ours included.

On your numbers: I think you're closer to right than the thread gives you credit for, but I want to make sure we're comparing the same thing. On a $400K duplex, strip land at say 20% and you're depreciating $320K. A properly done study on a two-unit typically reclassifies 25-30% into 5, 7, and 15 year property, so call it $96K of acceleration. Your $15–25K reads like the tax number rather than the deduction, which at a 32% marginal rate is almost exactly where $30K lands. If that's what you meant, we agree and you stated it more usefully than most people in this thread do, because the deduction is the number every firm advertises and the tax savings is the number that hits your account.

The bigger caveat neither number captures: if the owner isn't a real estate professional, doesn't materially participate in an STR, and has no passive income, that loss gets suspended under §469 and does nothing this year.

And your last question is the best one anyone asked here. "Did your CPA give you specifics or just hand you a business card" — that's the whole ballgame. A CPA who can tell you why a firm, what the methodology is, and what happens in an exam is giving you a referral. A CPA handing over a card is giving you a favor to someone else.

You're also right that a bad study invites scrutiny, which is the same point Natalie made upthread about disallowed modeled studies. That's not a marketing line for us — it's the actual risk, and it's why the fee spread between a $500 software output and an engineering study exists.

Open offer: if you own anything that's been through a cost seg, send it over and I'll have one of our engineers do a full study on the same property at no cost, and you can compare it line by line against what you've got. If you don't have an existing study, I'll do one on a property of yours for free anyway. No contract, no pitch, and you're welcome to post the results here publicly whether they make us look good or bad. Given what you've said about us, that seems like the only response that actually means anything.

Nathan ResnickPartner, Cost Segregation Guys

@Bo Smithundefined

Nathan Resnick · Answer

@Natalie Kolodij disclosure first: I'm a partner at Cost Segregation Guys, one of the firms named upthread. So I have an obvious interest in agreeing with you, and I want to be careful about how much weight I put on that.

I'll say plainly that I can't verify your colleagues' outcomes and I'm not going to repeat them as a talking point. But the mechanism you're describing tracks with what we see, and I think the "we'll back it with a full study if audited" promise deserves more scrutiny than it usually gets.

The problem with that backstop is that a study prepared after the exam opens is a fundamentally weaker document than one prepared contemporaneously. The engineer never observed the property in its placed-in-service condition. Invoices and change orders that were available at acquisition may be gone. Anything that got renovated in the intervening years can't be inspected as it was. So the taxpayer ends up substituting a new position mid-exam, which is close to the worst posture to be in as you're asking the examiner to accept a document that was manufactured in response to their own inquiry.

The second-order problem is the penalty exposure. If the original study gets disallowed, the reasonable cause and good faith argument under §6664(c) gets a lot harder, because the thing the taxpayer relied on is the thing that just failed. A 20% accuracy-related penalty on top of the tax and interest can swallow the fee savings several times over. That risk almost never shows up in the comparison when someone is deciding between a $500 modeled study and an $3500 engineering study.

For what it's worth, the IRS ATG is fairly clear about the hierarchy as the detailed engineering cost estimate approach sits at the top of the recognized methodologies, and modeling and sampling approaches sit meaningfully below it.

Genuine question, since you see more exam outcomes than I do: are you seeing the examiners go after the methodology itself, or is it mostly the underlying documentation and land allocation falling apart? We've had a few come across our desk as second opinions and it's usually been the latter, but our sample is self selected.

Nathan ResnickPartner, Cost Segregation Guys

Nathan Resnick · Answer

@Lee Ripma

Appreciate you taking the time to answer Sean, and I want to be upfront that I'm a partner at Cost Segregation Guys, so I'm the biased party here.

One correction, and I don't think the mix up is your fault: we're not an algorithm-based or rapid-modeling product. Our studies are performed by engineers doing component takeoffs and cost estimating, with a named preparer on the report. I suspect the confusion comes from our turnaround times as we move fast enough that people reasonably assume software is doing the work. That's a positioning problem on our end, not a reading comprehension problem on yours.

That said, I'm not here to talk down DIY Cost Seg or KBKG. Both are real companies doing real work, and we've actually hired a engineer from KBKG before who is now on our team. I'd rather an investor use a software study than skip cost seg entirely, which is what most of them do.

Where I'd argue the engineering approach actually earns its fee:

Renovation history. If a property has had meaningful capex, an engineering study lets you claim a partial asset disposition on what you tore out like the old roof, the old HVAC, the old cabinets. That's an elective deduction you have to take in the year of disposition or it's gone forever, and modeling-based studies generally don't develop the component-level detail to support it. On a heavy value-add deal, the PAD is frequently worth more than the acceleration itself.

Exam posture. The IRS Audit Techniques Guide is explicit that the detailed engineering cost estimate approach is the most reliable of the recognized methodologies, and modeling approaches sit lower on that list. On a small duplex that distinction is mostly academic. On a $1M property, or a return that's already drawing attention for REPS hours, it stops being academic.

Anything unusual. Mixed-use, heavy site work and land improvements, specialty build-outs. Models are built on averages, and those properties aren't average.

Your last point was the best one in this whole thread. If the CPA has actually used a firm and stands behind the work, that's worth more than any review page.

If you're ever curious, I'd be glad to run one of your properties through our process at no cost and let you compare it line-by-line against the study you already have. No pitch attached, and you're welcome to post the comparison publicly either way. I'd rather people in this forum know exactly what the difference is and isn't.

Nathan Resnick Partner, Cost Segregation Guys

Nathan Resnick · Answer

Sean, I'm a partner at Cost Segregation Guys, so read everything below with that bias in mind.

I'm late to this thread (found it while doing a sweep of where our name comes up), and I debated whether to reply at all. But you asked a fair question in public and nobody from our side answered it, so here's the straight version.

On the Trustpilot thing you were right to flag it.

A cluster of reviews that all appear within a few months is exactly the pattern people should be suspicious of, and I'm not going to tell you your instinct was wrong. Here's the actual explanation: for most of our history we've worked through CPA and wealth advisor referrals, not direct to clients. In that channel, the CPA does the vetting, and nobody thinks to ask the property owner for a public review. When we started marketing directly to investors, we started asking clients to leave reviews which is why they bunch up recently instead of spreading back over the years. If you look at our Trustpilot and Google Reviews, you will see way more reviews now as well as we've continued to grow a lot.

The "decades" language on our site refers to the combined engineering and tax experience of the people doing the work, not the age of the entity. That's a common bit of marketing shorthand in this industry and I think it's fair to push on it, so I'll be direct: if a firm won't tell you plainly which one they mean, that's a real signal.

One correction, respectfully, to Lee's reply: we aren't an algorithm-based or DIY-style product. Our studies are engineering-based meaning component takeoffs, cost estimating, site or photo documentation, and a report written to withstand the IRS Audit Techniques Guide, with the engineer's name on it. That's a different product from software tools like DIY Cost Seg, which are legitimate for what they are, but they're a different thing at a different price point. Lee's broader advice was solid, though: if your CPA has actually used a firm and stands behind the work, that's a meaningful data point. We also offer in person studies, which many firms like Seneca and RE Cost Seg don't.

Now the part you actually care about is a study worth it on a $400K duplex?

Honest answer: sometimes yes, sometimes no, and the deciding factor usually isn't the study. It's whether you can use the deduction.

Rough math on a property like yours. Strip out land (call it 20%, so $320K depreciable). A duplex will typically reclassify somewhere in the 25-30% range into 5, 7, and 15 year property, call it $96K. With 100% bonus depreciation, most of that lands in year one.

But that deduction is only worth something if it has income to offset. If you're not a real estate professional under §469, don't materially participate in a short-term rental, and don't have other passive income, that loss gets suspended and sits on the shelf until you have passive income or you sell. Real money, wrong year. Anyone who quotes you a "tax savings" number without asking about your participation status and your other income is quoting you a deduction, not a savings.

Two other things nobody volunteers: you'll recapture the 5-year property as ordinary income when you sell (unless you 1031), and if you've already owned this a few years, you don't need to amend anything as a Form 3115 catch up lets you claim the missed depreciation in the current year.

How to vet any firm in this space, including us:

• Ask who performs the study and what their credential is. An engineer, a CPA, or a salesperson with software? Get a name.
• Ask for a redacted sample report. Every real firm has one. Look for component level detail and a methodology section, not a summary page with a big number on it.
• Ask what happens if the IRS examines it. Get it in writing. Is audit support included for the life of the asset, is it billed hourly, or does it not exist?
• Ask which of the six IRS recognized methodologies they're using. If the answer is vague, move on.
• Get the estimated benefit before you pay anything, and make sure the fee is a small fraction of the first year benefit, not a marginal one.

Run those five questions past us and past whoever else you're considering, and let the answers decide it. If we're not the right fit for a $400K duplex, I'd genuinely rather tell you that than sell you a study you don't need. A bad fit costs us more in reputation than the fee is worth, which is the whole reason I'm writing this instead of ignoring the thread.

Happy to answer questions here in the open, tax nerd to tax nerd, whether or not you ever become a client.

Nathan Resnick Partner, Cost Segregation Guys

Account Closed · Answer

One thing I noticed with a lot of cost seg firms is that they don’t really operate like consumer saas companies so their public reviews are thin. What mattered more for me was how clean and defensible the study looked once it was in my CPA’s hands and that part checked out.

Lee Ripma · Answer

@Sean Pedeflous - I have not personally used this company but they have an algorithm based rapid cost seg which is similar to the two others I have used, KBKG and DIYcostseg.com. I personally use DIY cost seg for all my studies now, feel free to contact me for my discount code. If your CPA has used the recommended one then it’s likely good as well. **not tax of legal advice, always consult professionals, just my personal experience!

Nathan Resnick · Answer

Hey Alan, your account has one post, no profile picture and nothing else to show. You are most likely a competitor trying to hurt us. I don't appreciate that. I am all in for friendly competition but not spam like this.

Jared Bonner · Answer

what about costsegregation.com

Bo Smith · Answer

Red flags everywhere on that one. Reviews clustered in recent months screams purchased reviews or shell company rebranding. For cost seg on a 400k duplex, you're looking at maybe 15-25k in depreciation acceleration if done properly, but a bad study can trigger audits. Did your CPA give you specifics on why that company or just handed you a business card?

Alan Zinger · Answer

I did a bit of research about these guys. I don't like to poo poo people's companies, but their marketing seems a bit fishy at best. They "guarantee max tax deductions" and offer a price match guarantee (rarely bottom-price companies succeed in the long term without massive market share). On reddit, a bunch of new reddit accounts fake-post about the last cost seg they did with Cost Segregation Guys, but they all have the same message (aka they are spamming cost seg threads). They taut they are the "number one" cost seg co on Trustpilot, but reviews are easy to game on the site. I personally get a weird vibe from their content

Has anyone ever used or heard of this company? Cost Segregation Guys

Has anyone ever used or heard of this company? Cost Segregation Guys

Most Popular Reply

17 Replies