For multifamily operators, syndicators, and commercial buyers
Cost segregation for larger commercial and multifamily acquisitions
Engineering-reviewed studies designed for larger and more complex properties — multifamily, industrial, office, warehouse, and mixed-use. Same-day preliminary modeling; engineered final delivered on a timeline calibrated to property complexity. Larger properties may include site visits, expanded engineering review, and additional documentation.
Engineering-reviewed · IRS Pub 5653 methodology · RSMeans 2026 cost data
How studies for larger and more complex properties work
At residential scale (single-family, small STR, condo), cost segregation can run from structured property data — satellite imagery, county assessor records, RSMeans 2026 cost basis, MACRS classification per Rev. Proc. 87-56. At commercial and institutional multifamily scale, the engineering work expands:
- On-site walkthrough at $3M+ basis when warranted — specialty MEP, significant tenant build-out, manufacturing or laboratory components, hospitality FF&E density, or mixed-use allocation work all benefit from physical engineer verification.
- MEP and system-level breakdowns — HVAC zones, electrical distribution, plumbing systems, fire protection, vertical transportation — each evaluated for component-level classification rather than treated as part of the building shell.
- PIS allocation across acquisition and capex phases — properties with material post-acquisition renovation require separate basis treatment for the original acquisition vs. each capex tranche (different PIS dates, different MACRS recovery schedules, Qualified Improvement Property handling for interior commercial work).
- Partial-disposition opportunities — when renovation removes components (old roof, old HVAC, demolished tenant fit-out), the remaining basis of those components can be written off in the disposition year — but only if the original study identified them. Larger studies include partial-disposition-ready component schedules.
- Acquisition-aware treatment for multifamily operators, syndicators, and larger portfolios — coordination with the partnership's tax position, basis allocation across investors, K-1-aware reporting, and §481(a) lookback support when prior years missed accelerated depreciation.
Same IRS Audit Techniques Guide (Pub 5653) methodology as $5,000–$15,000 traditional engineering firms. The difference is scope-of-work calibration: we don't apply institutional engineering depth to single-family rentals, and we don't shortcut larger acquisitions with residential-grade automation.
Working with syndicators and multifamily operators
Cost segregation studies on partnership-held real estate flow through to investors via K-1. The methodology stays the same; the coordination work changes:
- Two-phase lightweight intake — phase 1 captures property facts (basis, PIS date, ownership structure, capex history) before close; phase 2 expands during engineering walkthrough if scope warrants.
- K-1-aware reporting — depreciation flows through the partnership tax return; the study report includes a breakdown CPAs can map directly to Form 4562 and §704(b) / §704(c) allocations as warranted.
- §481(a) lookback support for prior-year acquisitions — Form 3115 catch-up workpapers for properties acquired before this tax year that captured pre-2025 bonus depreciation rates (100% / 100% / 100% / 80% / 60%) but were never engineered.
- Coordination with the partnership's CPA — before finalizing scope, we'd rather understand the partnership's basis position, at-risk status, and existing depreciation methodology than discover misalignment at delivery. Reply with your CPA's contact and we can include them in scoping calls at no charge.
Pricing
Per-property fee scales by basis band and property type. $25M+ scopes routed to custom proposal. Specialty Commercial (hospitality, manufacturing, complex restaurant, specialty industrial) priced per engagement.
| Property type | Basis band | Per-study fee |
|---|---|---|
| Standard Commercial | <$1M | $1,995 |
| $1M–$3M | $3,295 | |
| $3M–$5M | $4,995 | |
| $5M–$7M | $6,295 | |
| $7M–$10M | $7,795 | |
| $10M–$25M | $10,995 | |
| $25M+ | Custom proposal | |
| Multifamily 5+ | <$1M | $1,995 |
| $1M–$3M | $3,595 | |
| $3M–$5M | $5,995 | |
| $5M–$7M | $7,995 | |
| $7M–$10M | $10,495 | |
| $10M–$25M | $14,995 | |
| $25M+ | Custom proposal | |
| Industrial / Warehouse | <$1M | $2,495 |
| $1M–$3M | $3,995 | |
| $3M–$5M | $6,295 | |
| $5M–$7M | $7,995 | |
| $7M–$10M | $9,795 | |
| $10M–$25M | $13,995 | |
| $25M+ | Custom proposal |
Volume bundles available: 5% off for 2 properties, 10% for 3–4, 15% for 5–9, portfolio pricing on 10+. Full residential matrix and tier definitions at /pricing/.
Frequently asked
How does this differ from a residential cost segregation study?
Larger commercial and multifamily studies generally involve more component-level engineering work than a single-family rental: MEP system-level breakdowns, PIS allocation across acquisition and capex phases, partial-disposition analysis for renovation components, and §1245 / §1250 reclassification across a wider asset mix. The methodology is the same IRS Audit Techniques Guide (Pub 5653) framework — the scope is broader. Larger properties may include site visits, expanded engineering review, and additional documentation; turnaround is calibrated to property complexity rather than a one-size-fits-all promise.
How does cost segregation flow through to investors and partners?
Cost segregation accelerates depreciation at the entity level. In a partnership or LLC, the resulting depreciation is allocated to partners per the operating agreement and shows up on each partner's K-1 (typically Box 2 for rental real estate income/loss, Box 20-AH or similar for §704(b) / §704(c) special allocations). Whether and when individual partners can use the loss depends on at-risk basis (IRC §465), passive-activity limits (IRC §469), and election status. The study is identical regardless of structure; how it lands at the investor level depends on the partnership's tax position and each partner's own basis. Coordinate with the partnership's CPA before finalizing scope.
Can you handle a §481(a) catch-up across a portfolio?
Yes. Form 3115 (Application for Change in Accounting Method) under automatic-consent procedures in Rev. Proc. 2015-13 may allow a §481(a) cumulative catch-up of previously-missed accelerated depreciation in the current year — without amending prior returns. We coordinate with your CPA on the §481(a) computation and provide the Form 3115 workpaper pack. Verify treatment with your CPA before filing.
What's your audit defense process for a larger study?
Every Cost Seg Smart study includes engineering-team review, a 16-check QC validator before delivery, RSMeans citation per component, and Rev. Proc. 87-56 asset class mapping with stated rationale. If your study is examined, we respond directly to examiner questions, provide workpaper exhibits (cost-allocation schedule, RSMeans citations, county-assessor cross-references), re-derive §481(a) computations if a lookback is challenged, and supply engineering attestation reconfirming the report — all at no additional charge within 36 months of delivery. We do NOT provide IRS representation (your CPA / EA / attorney handles that under Circular 230). Full scope at /audit-defense/.
What's the turnaround for a $20M acquisition?
Same-day preliminary modeling — purchase price, basis allocation estimate, year-1 deduction range, partial-disposition opportunities. Engineered final delivered on a timeline calibrated to property complexity; for an $18–25M multifamily or commercial acquisition this is typically 1–3 weeks post-close (faster for portfolios we already know; longer for properties with significant renovation, mixed-use allocation work, or specialty MEP). We do not promise a one-hour turnaround on institutional-scale work — the engineering depth that survives examiner review takes the time it takes.
How do you handle properties that close 30 days from now?
Earlier the better. Pre-close engagements let us flag basis-allocation issues in the purchase agreement, model the year-1 deduction so you can plan estimated taxes, and structure the study to capture all qualifying components from day one. If you have a closing date, send us the LOI / purchase agreement and we'll schedule the engineering intake to align with your close. We can deliver a preliminary the same day we receive the deal docs.
Do you require a site visit?
Site visits are routine for studies at $3M+ basis when warranted by the property's complexity — specialty MEP, significant tenant-fit-out, manufacturing or laboratory components, mixed-use allocation, or hospitality assets where component density requires walk-through verification. For standard multifamily and standard commercial at lower basis, satellite imagery, county assessor records, RSMeans 2026 cost data, and structured property data are typically sufficient. The IRS Cost Segregation Audit Techniques Guide does not require a site visit; it requires engineering-based classification and component-level documentation, which the methodology produces either way.
Talk to us about your acquisition.
Send us the LOI or purchase agreement and we'll model a same-day preliminary. No discovery-call gate, no upfront commitment.