What does a cost segregation study do?

It reclassifies building components so more of the purchase or construction cost is treated as 5-, 7- or 15-year property instead of 39-year real property. Taxpayers acquiring, renovating or building tend to overstate 39-year real property, which limits depreciation deductions in the early years of the investment; reclassification accelerates those deductions and frees up cash flow.

What makes a property a good candidate for a study?

McGuire Sponsel says it typically sees consistent benefit when an acquisition or new build exceeds $750,000, an interior renovation exceeds $200,000, a company carries a large fixed asset schedule, or a company renovates or makes repairs frequently. Studies can be performed on current-year transactions or retroactively.

How much is the 179D deduction worth?

For properties placed in service after December 31, 2022, the deduction is up to $1.00 per square foot, rising to a maximum of $5.00 per square foot where prevailing wage requirements are met. A building qualifies for $0.50 per square foot if it reduces energy consumption by 25% against the reference standard and for $1 per square foot at a 50% reduction. Under the One Big Beautiful Bill the deduction remains for newly constructed assets that begin construction before June 30, 2026.

Cost segregation

McGuire Sponsel

McGuire Sponsel is a specialty tax consulting firm that works as an extension of CPA firms rather than selling directly to taxpayers. Its practice lines are fixed asset services (cost segregation, the 179D deduction, fixed asset management and review, and property tax), research and development tax credits, global business services (transfer pricing, international compliance, expansion and structuring, IC-DISC) and location advisory (site selection, incentive procurement and incentive compliance).

Cost segregation reclassifies building components so that property otherwise treated as 39-year real property is depreciated over 5, 7 or 15 years. The firm's approach combines civil, structural and architectural engineering with tax law: its professionals perform a site inspection for every study, and all costs and their classifications are documented to withstand IRS scrutiny. Studies are performed for current-year transactions or retroactively. The firm publishes the criteria under which it typically sees consistent benefit: an acquisition or new build in excess of $750,000, an interior renovation in excess of $200,000, large fixed asset schedules, or frequent renovation and repair activity. A free quote or estimate is offered before engagement.

The firm says it partners with more than 450 CPA firms in all 50 states along with hundreds of real estate and legal advisory firms. Its fixed asset services page reports over $3.8 billion in reviewed assets, over $300 million in increased cash flow and 250 years of combined experience, and describes a team of industrial and manufacturing engineers, CPAs, holders of a Masters in Accounting, construction managers and financial analysts. Industries it names as the strongest fits include assisted living, auto dealerships, hotels and resorts, medical facilities, multifamily, restaurants, offices, warehouses and manufacturing.

Fees are not published. The firm is reached on +1-800-322-7776 or through the quote form; because the model is built around the CPA relationship, an owner approaching directly should ask how the firm will work alongside their accountant.

Best for

CPA firms and their clients with an acquisition or new build over $750,000, or an interior renovation over $200,000, who want an engineering-based study with a site inspection. Owners of small single properties below those thresholds are unlikely to clear the cost.

What they do

Cost segregation studies
179D energy-efficient commercial building deduction
Fixed asset management and fixed asset review
Property tax review and assessment appeals
Research and development tax credits
Transfer pricing and international compliance
IC-DISC export incentives
Site selection and incentive procurement
Incentive compliance

Details

Attribute	Value
Method	Engineering-based
Minimum basis	$500k

What stands out

Says it partners with more than 450 CPA firms in all 50 states plus hundreds of real estate and legal advisory firms.
Performs a site inspection for every cost segregation study and documents classifications to withstand IRS scrutiny.
Fixed asset services page reports over $3.8 billion in reviewed assets and over $300 million in increased cash flow.
Publishes its fit criteria: acquisitions or new builds over $750,000 and interior renovations over $200,000.

Common questions

What does a cost segregation study do?: It reclassifies building components so more of the purchase or construction cost is treated as 5-, 7- or 15-year property instead of 39-year real property. Taxpayers acquiring, renovating or building tend to overstate 39-year real property, which limits depreciation deductions in the early years of the investment; reclassification accelerates those deductions and frees up cash flow.
What makes a property a good candidate for a study?: McGuire Sponsel says it typically sees consistent benefit when an acquisition or new build exceeds $750,000, an interior renovation exceeds $200,000, a company carries a large fixed asset schedule, or a company renovates or makes repairs frequently. Studies can be performed on current-year transactions or retroactively.
How much is the 179D deduction worth?: For properties placed in service after December 31, 2022, the deduction is up to $1.00 per square foot, rising to a maximum of $5.00 per square foot where prevailing wage requirements are met. A building qualifies for $0.50 per square foot if it reduces energy consumption by 25% against the reference standard and for $1 per square foot at a 50% reduction. Under the One Big Beautiful Bill the deduction remains for newly constructed assets that begin construction before June 30, 2026.