A cost segregation consultant is a specialist, often an engineer or construction cost expert, who analyzes your property, assigns costs to each component, and writes the report that supports faster depreciation. They work alongside your CPA. The consultant handles the building analysis, and the CPA handles how it fits into your tax return and overall plan.
This content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.
Who are cost segregation consultants?
Cost segregation consultants come from a few backgrounds:
- Engineers who understand building systems like electrical, plumbing, and HVAC
- Construction cost estimators who know what components cost to build or replace
- Tax specialists who know how the tax code classifies property
The best teams combine all three. A common credential is the Certified Cost Segregation Professional (CCSP), offered by the American Society of Cost Segregation Professionals.
What a consultant does, step by step
- Screens the property. Estimates potential savings and confirms the study makes sense.
- Collects documents. Closing statement, appraisal, plans, invoices, prior depreciation schedules.
- Inspects the property. Walks the site or runs a virtual tour, measuring and photographing components.
- Classifies components. Decides which parts are 5-, 7-, 15-year, or building property, based on tax law and how each part is used.
- Assigns costs. Uses actual cost records or engineering estimates.
- Reconciles. Makes sure every dollar ties back to your total basis.
- Writes the report. Documents methods, legal support, photos, and asset schedules.
- Supports filing. Provides a depreciation schedule and, for look-back studies, the Form 3115 numbers.
- Defends the study. Helps answer IRS questions if your return is examined (if included).
Consultant vs. CPA: who does what?
| Task | Cost segregation consultant | Your CPA |
|---|---|---|
| Analyze building components | Yes | No |
| Write the cost segregation report | Yes | No |
| Decide whether to take bonus depreciation | Advises | Decides with you |
| Apply passive loss and REPS rules | No | Yes |
| Prepare Form 3115 and your tax return | Supplies numbers | Prepares and files |
| Plan for recapture and 1031 exchanges | May advise | Yes |
| Represent you in an audit | Supports the study | Represents you |
How to get the most from your consultant
- Loop in your CPA early. Make sure they agree on timing, bonus elections, and how results will be entered.
- Share complete documents. Better records mean more accurate, more defensible results.
- Be available for the site visit. Point out recent upgrades, removed components, and how spaces are used.
- Ask about renovations. Removed components may qualify for a partial asset disposition write-off.
- Review the draft. Check the cost basis, land value, and dates before the report is finalized.
How consultants are paid
Most charge a flat fee based on property size and complexity. Be cautious of fees tied to a percentage of your tax savings, which can encourage aggressive results.
Frequently asked questions
Is a cost segregation consultant the same as a cost segregation company?
Do I need a licensed engineer?
Can the consultant talk to the IRS for me?
See what your property may qualify for
Run our 2-minute STR Qualification Quiz or model your Low / Mid / High cost segregation range.
Related guides
How to Choose a Cost Segregation Company: 10 Questions to Ask
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Read guideCost Segregation Services: What's Included and What to Expect
What do cost segregation services include? From feasibility estimates to Form 3115 and audit support, here's what you should get and what to ask about.
Read guideWhat's in a Cost Segregation Report (and How to Read One)
A cost segregation report should be more than a summary page. Learn the sections a quality report includes and what to check before you file.
Read guideCSSI, Engineered Tax Services, Cost Segregation Partners: How to Compare Cost Segregation Providers
Researching CSSI, Engineered Tax Services, or Cost Segregation Partners? Use this neutral checklist to compare any cost segregation provider fairly.
Read guideThis content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.