After inheriting my grandmother’s rental property, I worried about crushing depreciation rules and high taxes. A friend at my church recommended Jared for cost segregation. He visited the condo, snapped photos of plumbing and electrical systems, and then broke down how faster depreciation on specific elements would save me thousands. The process felt effortless—I just uploaded my depreciation schedules to his portal—and my accountant was impressed with the new deductions.
David M.
Jared Montoya’s blend of expertise in tax credits and incentives, are unparalleled. His ability to tailor his services to individual needs while maintaining a high standard of professionalism is what sets him apart in the field.
Eliseo O.
I had a great experience working with Jared. He took the time to sit down with me and go over everything and was always there whenever I had any questions. I would highly recommend Jared and his services.
Steve M. – Realtor
ACTUAL CLIENT COST SEGREGATION
RECOUP
BEFORE AND AFTER
$374,751 RECOUPED
Frequently asked questions
You may be able to go back 10 to 15 years or more to claim missed depreciation deductions using a retroactive cost segregation study, provided you still own the property.
- $500K–$1M Property: $5,000–$12,000
- $1M–$3M Property: $7,000–$20,000
- $3M–$10M Property: $20,000–$40,000
- $10M+ Property: $40,000–$60,000
- Study Completion: 30–60 days to produce the engineering report.
- Refiling Method: Application for Change in Accounting Method, which allows catching up on missed depreciation from previous years without amending each past return.
- Refund Receipt: The resulting tax deduction is taken in the current year, providing immediate savings. If an amended return is required, it can take 16 weeks or longer for the IRS to process.
- Deadline: Generally, you can look back at properties acquired within the last 1–10 years.
Examples & ROI Scenarios
- $750k Property Example: An $8,000 study reclassifies 30% of a property’s $600k value ($180k) into shorter-lived assets. With 100% bonus depreciation, this provides roughly $66,600 in first-year tax savings (assuming a 37% tax rate), an over 8x ROI.
- Large Commercial Building ($3M+): A $10,000–$25,000 study can generate over 10x returns by shifting a higher proportion of assets to shorter lifespans, producing substantial tax deductions.
- Small/Mid-size Commercial: A $10,000 study on a $1M–$3M property can provide 15–40x returns on investment in year one.
- Retroactive Filing: A Cost Segregation Study can be applied to properties purchased years ago.
- Cost segregation is neither illegal nor shady ; it is an IRS-sanctioned tax strategy. It allows real estate owners to accelerate depreciation deductions on components like flooring or landscaping (5-15 years) rather than the building itself (27.5-39 years). While aggressive, a proper engineering-based study is a legitimate, compliant tax-planning tool. It is the most accurate accounting method.
- Most of the time home owners have filed for years and years without utilizing a cost seg study. We go back and recoup multiple years of filings. The amount recouped and received is often substantial.
$200,000 Short-Term Rental:
Before: $5,000 – $6,000 depreciation annually.
After: $70,000 immediate deduction (35% of assets reclassified), saving $21,000 in taxes in year one (at 30% rate)
$21,000
$1.4 Million Apartment Building:
Before: $30,246 in first-year depreciation.
After: $320,426 in accelerated first-year depreciation.
$118,500
$2 Million Commercial Building:
Before: $41,000 annual depreciation (39-year straight-line), resulting in roughly $15,000 tax savings (at 37% bracket).
After: $625,000 first-year deduction (reclassifying 37.5% of value), resulting in $231,000 first-year tax savings.
$231,000
$28 Million Construction Project:
Before: Standard depreciation resulted in low initial deductions.
After: 24% of costs (6.9 million) reclassified, providing $2.3 million in immediate tax savings
$2,300,000
Cost Segregation Study Estimate
Why did the IRS establish
Depreciation as an Incentive?
The IRS comes up with incentives to motivate businesses to do certain things with their money that enhances the community. Buying assets supports other businesses, which ultimately enhances their community. Depreciation of assets was established to give money back to businesses as a way to incentives them to buy assets. This means the amount of money you spend on qualified assets, is given back to you over time through a tax deduction.
PERSONAL
PROPERTY
BUILDING
STRUCTURE
LAND
IMPROVEMENTS
Cost Segregation is simply an accounting method.
It divides assets into categories defined by the tax codes.
These categories all have different depreciation parameters.
If the Cost Segregation method isn’t used, only one category can be used.
Only using one category for rental property is the easiest way for accountants to process taxes.
This gets the least amount of money back.
Can Cost Seg be done by the rental owner?
A licensed contractor or engineer is required to perform the inspection needed for the cost segregation study.
A homeowner most likely would not satisfy the requirements.
IRC Section 1245 vs 1250.