Maximize Cash Flow Using the IRS Tax Code

No, when done correctly. Cost segregation has been explicitly recognized by the IRS for decades. Audit risk typically comes from weak documentation or non-engineered reports, not from the strategy itself.

An IRS-defensible study is based on engineering analysis, asset-level classification, documented assumptions, and support tied to tax law and case precedent. This is the standard we follow for every study we deliver. Read our cost segregation legal guide for the court cases and frameworks that support these classifications.

No. We only provide fully engineered, IRS-ready cost segregation studies. We don't offer template, desktop-only, or non-engineered reports because they often introduce unnecessary risk for investors and CPAs.

Most income-producing properties placed in service after 1986 are eligible. This includes single-family rentals, short-term rentals (Airbnb/STR), multifamily properties, and many commercial buildings. The key requirement is that the property is used for business or investment purposes, not as a personal residence.

The fastest way is to use the free calculator at the top of this page. It gives you a quick estimate of potential depreciation and tax savings so you can decide whether a full engineered study makes sense. For a deeper analysis, read our decision framework based on 1,000+ studies.

The calculator estimates how much of your property could be reclassified into shorter-life assets, how depreciation is accelerated, and the potential tax impact based on your assumptions. It's designed for planning and decision-making. Learn more about how the calculator works and the AI methodology behind it.

The calculator is directional — typically within 10–20% of final study results for standard properties. A full engineered study is more precise because it's based on actual purchase documents, renovation costs, and detailed engineering analysis. Most investors use the calculator first, then confirm with a study. See our full accuracy breakdown.

Yes. You can adjust inputs like land value, tax rate, placed-in-service year, and reclassification assumptions to instantly see how outcomes change. This is useful for tax planning and timing decisions.

Yes. The calculator is free and available instantly. It's meant to help you evaluate whether cost segregation is worth pursuing before committing to a study.

If your property has major renovations, prior depreciation, ownership changes, or you're planning around a specific tax year or deadline, it's usually worth chatting with us. A short conversation can clarify edge cases the calculator can't fully capture.

For purchases, we typically need the settlement statement, purchase agreement, and basic property details. For renovation projects, we review improvement invoices, contractor scopes, and placed-in-service dates. We'll clearly outline exactly what's needed after a short intake.

Most engineered studies are completed in 2–4 weeks after we receive the required documentation. If you're working against a tax deadline, we recommend reaching out early to confirm timing.

Our cost segregation studies start at $499 for a simple single-family rental and increase based on property size, complexity, and scope of analysis — roughly 50% less than traditional firms. We provide a fixed-fee quote upfront so you can clearly evaluate return on investment before moving forward.

Yes. Our studies are built to be CPA-ready with clear schedules, classifications, and supporting documentation. We're also happy to coordinate directly with your CPA to make filing straightforward.

If the IRS reviews your return, we provide documentation and technical support to help your CPA respond. Our methodology and reporting are designed with audit review in mind.

The IRS requires depreciation to be calculated using your actual cost basis, not current market or appraised value. Depreciation is meant to recover your investment in the property, not unrealized appreciation, which keeps deductions objective and verifiable.

If you're early in the process, start by running the free calculator above. If you want to learn more first, explore our guides: Is cost segregation worth it?, How much does it save?, and Why our studies cost 50% less. If the numbers look meaningful or your situation is more complex, chat with us and we'll help you decide the best next step.

Your study will be personally signed off by Matthew Gigantelli, Principal Cost Segregation Engineer at Modern CFO — our trusted engineering and CPA partner. Matthew's credentials include: 5+ years specialized in cost segregation engineering, $1Bn+ in accelerated depreciation delivered, 1,000+ studies completed across all property types, methodology aligned with IRS Audit Techniques Guide, and ASCSP certification (Member #M009-25). Book a call with Matthew directly →

Cost segregation isn't right for everyone. It may be a poor fit if: (1) You can't use the deductions — W-2 earners without Real Estate Professional Status or the short-term rental loophole face passive activity limitations that suspend cost seg losses, meaning you can't offset your salary. (2) You're selling within 18 months — depreciation recapture taxes at ordinary rates (up to 37% for Section 1245 property) can erase most of the benefit on short holds. (3) Your depreciable basis is under $200K and study fees are high — the net savings may be thin. (4) You're in a low tax bracket (12–15%) — deductions are worth less at lower rates. (5) The provider isn't qualified — non-engineered or template-based studies create audit risk without defensible results. We believe in honest assessments — if cost segregation doesn't make sense for your property, we'll tell you. Read our full guide: Why cost segregation is a bad idea (sometimes).

When you sell a property, the IRS 'recaptures' accelerated depreciation and taxes it. Section 1250 property (buildings) is recaptured at up to 25%. Section 1245 property (the personal property that cost segregation reclassifies — fixtures, flooring, appliances) is recaptured at ordinary income rates up to 37%. This doesn't eliminate the cost seg benefit — on holds of 3+ years, the time value of Year-1 savings almost always exceeds recapture costs. And 1031 exchanges defer recapture entirely. The key is planning for recapture from day one, not being surprised by it at exit. See our guide on why tax strategies fail at exit.

Only if you meet specific IRS requirements. Standard rental income is classified as 'passive' under IRC §469, which means losses can't offset W-2 income. Two exceptions unlock this: (1) Real Estate Professional Status (REPS) — requires 750+ hours/year in real estate AND more than 50% of your total working time, which is difficult with a full-time job. (2) Short-term rental loophole — if your rental has an average guest stay under 7 days and you materially participate (100+ hours/year), it's not classified as a 'rental activity' and losses can offset any income. Without either exception, cost segregation deductions are suspended until you generate passive income or sell the property. This doesn't mean they're lost — just delayed. Read our full guide: Cost segregation for W-2 earners.