Commercial & New Construction Cost Segregation - Scoped Engagements

How we approach commercial work

The same engineering-based analysis, run against the parts of the code that only apply to nonresidential property. Qualified improvement property, Section 179 on building systems, and the larger site and process components that carry most of the value on a commercial asset. Every study is expert reviewed before delivery and includes audit support.

Our residential practice is high volume and component-level by necessity, and that discipline is exactly what commercial work rewards. The failure mode on a large study is not the engineering, it is thin documentation behind big numbers. We build every report to be traced line by line, which is the same standard whether the reclassification is $190,000 or $1.8 million.

Commercial and new construction are quoted per property. A 40,000 square foot retail center and a duplex are genuinely different engagements, and any provider quoting both off a price list is guessing at one of them. You get a fixed fee and a timeline in writing before work starts, and the scope review itself is free.

Property types we scope

Apartment buildings, five or more units

Still on the 27.5-year residential schedule regardless of unit count. Scoped for scale and site complexity.

Office and medical

Tenant improvements are often the largest opportunity, through qualified improvement property.

Retail and mixed-use

Parking, site lighting, and buildout carry substantial short-life value. Mixed-use needs an income-mix determination first.

Industrial and warehouse

Docks, aprons, truck courts, yard paving, and dedicated process electrical.

Self-storage

Unusually land-improvement heavy: paving, fencing, gates, site lighting, and access control.

New construction, any size

The most accurate study available, because components trace to contractor line items instead of estimates.

Residential properties up to four units run through the standard $899 flat-fee process instead.

What changes on a commercial property

The baseline is 39 years

Nonresidential real property depreciates over 39 years instead of 27.5. The same percentage reclassification is worth more, because each dollar is rescued from a slower schedule.

Qualified improvement property becomes available

Interior improvements made after the building was first placed in service are 15-year, bonus-eligible property. Enlargements, elevators, escalators, and internal structural framework are carved out. QIP does not exist on residential rental property, and on a building with an active tenant improvement program it is frequently worth more than the original acquisition study.

Section 179 reaches building systems

On nonresidential property, roofs, HVAC, fire protection and alarm systems, and security systems can be expensed under Section 179. None of that is available on an apartment building. Caps, phase-outs, and the taxable income limit apply, so confirm current-year figures with your CPA.

Site work is a much larger share

Parking, site utilities, drainage and detention, loading areas, signage, and fencing are almost all 15-year property, and on retail or industrial properties they can be a large fraction of total cost.

The documentation standard scales with the dollars

A report reclassifying $1.8 million on round-number estimates is an audit exposure. The same amount supported by cost records, component-level photographs, takeoff detail, and written methodology is a report that defends itself. This is where cheap studies fail.

The full walkthrough is in our commercial cost segregation guide.

How a scope review works

1
Tell us about the property
Address, property type, square footage, purchase price or construction cost, acquisition or completion date, and whether you have done any improvements since.
2
We confirm what records exist
Closing statements, depreciation schedules, appraisals, and for new construction the schedule of values, pay applications, and change orders. The records available determine both the method and the accuracy.
3
You get a fee and a timeline in writing
Before any work begins, with the fee fixed for the scope described.
4
Engineering-based analysis, expert reviewed
Component classification aligned with the IRS Cost Segregation Audit Techniques Guide, reviewed before delivery, with audit support included. Your CPA receives asset classification schedules, depreciation schedules, methodology documentation, and the supporting detail behind every number.

Commercial cost segregation questions

What kinds of commercial property do you handle?

Office, medical, retail, mixed-use, industrial and warehouse, self-storage, apartment buildings above four units, and new construction of any size. Studies cover qualified improvement property and Section 179 treatment of building systems alongside the standard 5, 7, and 15-year component analysis. Each engagement is quoted per property after a free scope review rather than sold at the flat residential rate.

What does a commercial study cost?

It depends on property type, size, and what records exist. We quote a fixed fee after the scope review rather than publishing a range that would not mean anything across property types this different. You get the number before any work starts, and there is no charge for the scope review itself.

Is my apartment building commercial for depreciation purposes?

Almost certainly not. Lenders call five or more units commercial, but that is a financing term. For depreciation, a building is residential rental property when 80% or more of its gross rental income comes from dwelling units, at any unit count, which puts it on the 27.5-year schedule. See our multifamily page for the detail.

I just finished building. When should I do the study?

In the year you place it in service, while the construction records are still accessible. The schedule of values, pay applications, change orders, and subcontractor invoices are what make a new-construction study more accurate than any acquisition study, and they get much harder to collect after a couple of years. Our new construction guide lists exactly what to ask your contractor for.

Can I still do a study on a building I bought years ago?

Yes. A look-back study analyzes the property as of its placed-in-service date and gives your CPA the component detail needed to claim missed depreciation as a catch-up on a current return, generally without amending prior years. RentalWriteOff prepares the study; your CPA determines qualification and handles the filing.

Will you travel to the property?

The IRS Cost Segregation Audit Techniques Guide does not require an on-site inspection; it evaluates the quality of the analysis and its documentation. Most commercial engagements are completed from construction records, plans, photographs, and public records. If a property genuinely needs a site inspection, we say so during the scope review and it is reflected in the fee and timeline.

Request a scope review

Tell us about the property and we will confirm fee and timing before any work starts. There is no charge for the review.

Book a Scope Review Send property details instead

This page is for educational purposes only and does not constitute tax, legal, or financial advice. RentalWriteOff prepares cost segregation studies; your CPA or tax professional determines qualification, return treatment, and filing mechanics.

Cost Segregation for Commercial and New Construction Property