What a cost segregation report actually looks like
Most firms say "call us." We show you the product. Below is the six-section deliverable, plus real, redacted report examples for seventeen property types, each with its actual class-by-class allocation. Pick the closest match to yours.
What's in a cost segregation report
Every Cost Seg Smart study, regardless of property type, ships the same six-section engineered structure your CPA can file from without rework.
Year-1 federal benefit, MACRS class allocation, and basis reconciliation. The one page your CPA reads before filing Form 4562.
How the property was analyzed against the Rev. Proc. 87-56 asset-class framework and the IRS Audit Techniques Guide (Pub 5653).
Every depreciable component, line by line, mapped to a 5/7/15/27.5/39-year class with engineering rationale.
Year-by-year MACRS deduction tables formatted to drop onto Form 4562, with §168(k) bonus flagged.
For Form 3115 catch-up engagements: hypothetical vs. actual schedules and the cumulative §481(a) computation.
Cost-source citations, asset-class rationale, and an examiner-question response pack, with 36-month support.
How to read a cost segregation report
Knowing the sections is one thing; knowing what to actually look at is another. Here is what each page is telling you and what to check.
The executive summary leads with the Year-1 federal deduction and the total reclassified basis. Check that the allocated basis sums to your purchase price minus land. If the reconciliation does not foot, nothing else is verifiable.
A pie or table shows how basis splits across 5-, 7-, 15-, and 27.5- or 39-year classes. The 5- and 15-year buckets are the accelerated ones. This is the number people quote, and the number that varies most between properties.
Every component should carry a description, a Rev. Proc. 87-56 asset-class citation, a recovery period, and a basis. Vague descriptions or missing citations are the most common cause of disallowed reclassifications at audit.
Land is not depreciable, so its share is the single most consequential figure. The report should document a county-assessor cross-check or a defensible statistical fallback, not just assert a percentage.
Year-by-year tables should match the executive-summary headline and drop cleanly onto Form 4562. With 100% bonus restored, the 5-, 7-, and 15-year buckets deduct in full in Year 1.
For a full page-by-page walkthrough, including what an IRS examiner checks in each section, see the detailed reading guide.
Compare report examples by property type
Each card is one real, redacted study. The figures are illustrative from that single example, not benchmarks or expected ranges. Open any card to see the full component allocation.
Illustrative result from one sample report. Actual reclassification varies substantially with property age, improvements, tenant finish, equipment, land value, and other facts. Not a benchmark or expected range.
Why these percentages differ so much
The cards above range from under 20% to nearly 50%. That spread is the point: reclassification is driven by the specific property, not the property type. What moves it:
- → Property age — newer buildings carry more reclassifiable finishes and systems.
- → Renovations and tenant improvements — recent build-outs add 5- and 7-year assets.
- → Equipment intensity — equipment-heavy uses (kitchens, service bays, medical) reclassify more.
- → Site work — extensive paving, parking, and landscaping drive the 15-year bucket.
- → Land value — a higher land share leaves less depreciable basis to reclassify.
- → Local construction costs and finish level — these shift each component's allocated basis.
This is why we model your specific property before you commit, and never apply a rule-of-thumb percentage. The IRS Audit Techniques Guide (Pub 5653) warns against template and rule-of-thumb studies for exactly this reason.
Want the full PDF for your property type?
Pick your property type and we'll email you the complete illustrative sample report (one email, one PDF, watermarked). Or run your own numbers in about a minute.