The Ambrose Group has published a guide to cost segregation studies that explains how the studies work, which properties are strong candidates, what they typically cost and how long they take, and how 100% bonus depreciation affects the timing.
-- The Ambrose Group, a Texas appraisal, property tax and cost segregation firm, has published a guide to cost segregation studies for commercial and residential rental owners. The guide is available on the company website at https://theambrosegroup.com/cost-segregation-study-guide/.
The guide was written by Daniel Ambrose, MAI, Executive Vice President of Tax Services. It explains how a study works, who should consider one, and when the cost is not worth it.
A cost segregation study breaks a building into its parts. Some of those parts, such as certain finishes, fixtures and site work, can be depreciated over 5, 7 or 15 years instead of the standard 27.5 years for residential rentals or 39 years for commercial buildings. The result is larger deductions in the first years of ownership.
The guide stresses that this is a timing benefit. The deductions are moved earlier, not created. Shorter-lived components can also carry more depreciation recapture when the property is sold.
One step the guide highlights is land allocation. “Land doesn’t depreciate, so what you paid for it has to be separated from what you paid for everything else,” Ambrose writes. The guide says land value should be set with appraisal methods rather than a default percentage.
On who qualifies, the guide gives a working floor of about $500,000 in building basis. Below that level, or for an owner who plans to sell within one or two years, the cost of the study may outweigh the benefit. Owners also need taxable income for the deductions to be useful.
Properties with a large share of finishes and site work tend to benefit most. The guide names medical and dental facilities, restaurants and hotels as examples. Residential and short-term rentals use the same approach on a 27.5-year basis.
The guide also covers buildings bought or built years ago that were never studied. In that case, the owner can file Form 3115 to change accounting methods and claim the missed depreciation as a catch-up adjustment under Section 481(a), without amending old returns.
On cost, the guide cites market figures that run from a few thousand dollars for smaller residential rentals to the low five figures for well-executed commercial studies. A typical study takes about four to eight weeks from kickoff to the final report. Owners can get a first estimate from the free tool at https://theambrosegroup.com/cost-segregation-calculator/ on the company site.
The guide comes as owners continue to plan around 100% bonus depreciation. The One, Big, Beautiful Bill, signed July 4, 2025, made the 100% rate permanent for qualified property acquired after January 19, 2025. In January 2026, the IRS and Treasury issued Notice 2026-11 with interim guidance on the deduction, including how to determine eligibility and the elections available to owners. Building components classified as 5-, 7- or 15-year property can qualify for that deduction.
The guide also explains who should do the work. Citing the IRS audit techniques guide, it says a quality study calls for construction and cost-estimating knowledge along with tax knowledge. In most cases, an engineer identifies and prices the components, a valuation professional handles the land allocation, and the owner’s CPA puts the results on the return. More on the firm’s approach is at https://theambrosegroup.com/cost-segregation-consultants/ on its website.
About The Ambrose Group:
The Ambrose Group is a Texas real estate consulting firm based in Jersey Village that has provided appraisal, property tax consulting and cost segregation services since 1994. The company profile at https://theambrosegroup.com/about-real-estate-company/ covers its history and team.
Contact Info:
Name: The Ambrose Group
Email: Send Email
Organization: The Ambrose Group
Address: 16545 Village Dr Building A, Jersey Village, TX 77040, United States
Website: https://theambrosegroup.com/
Source: NewsNetwork
Release ID: 89207387
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