It’s that time of year again – Q4 and people start to scramble to see what their tax liabilities are going to be for the year. Business owners are meeting with their tax advisors and accountants to see what the damage is going to me. Many times the topic of cost segregation comes up and a smart tax advisor will encourage his/her building owner client to get a cost segregation study done. If you don’t have a resource to get that done, I’d be happy to be of help to you.
I work with building owners, investors, CPAs, EAs, tax professionals, commercial real estate brokers and REALTORS all across the U.S. to get cost segregation studies done so they can save money on their income taxes.
Check out our new resource at www.CostSegCalc.com. Plug in your asset details and you will see what you can save on your taxes. If you need a quote for the study, you can fill out the form there or give me a call.
Savannah, GA is one of the fastest growing areas in the country and commercial real estate is benefiting from that growth. The Port of Savannah is a huge driver of the growth and particularly industrial real estate as demand for warehouses grows.
I love Savannah! It’s a beautiful, historic Southern city that has such a great mix of new and old. Many buildings are being renovated and many others are being torn down and new ones going up. If you own commercial real estate in and around Savannah, GA and you want to discuss cost segregation, please reach out and I’d be happy to talk.
Regularly I get questions from CPAs, tax advisors, CRE brokers and building owners if a particular building is good for cost segregation. The fact of the matter is, most buildings with a basis north of $200,000 can generate a nice result with cost segregation. It will depend upon whether or not the owner can benefit from the increased accumulated depreciation expense our studies generate. We always encourage owners to consult their tax advisor before moving ahead with a cost segregation study.
In the video below, I run through some examples of recent sales and plugging in the asset details into our Cost Seg Calculator to see what kind of results might be expected from a cost segregation study.
The topic of mobile home parks as a hot new asset that many investors are pursuing is something that I have regular conversations about with a variety of investors. There are lots of parks between $1-$5MM but how about the big ones over $10,000,000? Are there many transactions at that scale?
In the past 12 months (Sept 2024 – August 2025) there have been a total of 37 parks that have sold for more than $10,000,000 according to my search on Crexi today. The highest price paid in this search was $35,000,000 and it just closed a month ago.
Investors are moving aggressively into mobile home parks because historically, they have been run by mom and pop shops. Think SFRs before Wall Street moved in with massive portfolio purchases. Many of these parks could stand to have an influx of capital and many need updates and repairs but at the same time, that means rents will rise and this is the last bastion for the lower classes to afford a home.
I get contacted a lot about mobile home parks and how cost segregation studies perform on these properties. I’d be happy to talk with you if you are in the market to buy a park. Mobile home and RV Parks do exceptionally well when it comes to cost segregation. It’s one of the reasons investors like them in addition to the incredible cash flow. Be sure to check out this highly read article I published some time ago and updated recently to reflect the One Big Beautiful Bill regarding Cost Segregation for Mobile Home Parks.
If you’d like the list of the properties highlighted in the post image, let me know and I can share that with you.
This is a phrase I hear regularly from both building owners and CPAs. When I hear it from building owners, it’s usually something that they picked up from their CPA. The topic might have come up and then the tax advisor says, “I’m not sure it’s worth it” when it comes to doing a cost segregation study.
This just came up recently on a $3MM industrial building we studied. They weren’t sure if it was worth it because of this specific building. The owner was able to take a $300,000 deduction this year because of doing a study. That’s well over $100k in income tax savings and yet prior to getting an estimate from me, they weren’t sure if it would be worth it or not.
We can study buildings with a basis as low as about $200,000 and still make it work for the owner. Almost every building is worth it if there is some basis. Sometimes it becomes a challenge with some 1031 exchange buildings and if you are planning to sell the building shortly. But if you are going to hold it for at least the next 2-3 years, it often makes a lot of sense to do a study.
As always, please consult your own tax advisor to make sure you can take advantage of the increased accumulated depreciation our studies generate. But have that discussion after you have an estimate in hand. Then you will truly be able to make an informed decision about your building and if it makes sense to study it.
If you are a commercial real estate owner or a commercial real estate broker, you’re going to want to familiarize yourself with our new cost segregation calculator. This is an excellent resource for you to get an idea what you might expect from a cost segregation study for your building.
Go to www.CostSegCalc.com and scroll down the page. You’ll see on the right hand side where you can enter in your asset details. No registration is required. Put in the cost basis, when it went into service, tax year etc and we will provide a range of what you can expect.
Below is a short demonstration as to how you can use this cost segregation calculator from CSSI Services.
If you like this information, be sure to check out more of my videos on my YouTube Channel. Connect with me on LinkedIn.
Editor’s Note: This article was originally published March 28, 2023 and has been fully updated in August 2025 to reflect new bonus depreciation rules and cost segregation strategies for mobile home and RV park owners based upon the One Big Beautiful Bill that has brought back 100% bonus depreciation. The strategies outlined below remain highly relevant and can lead to significant tax savings in 2025 and beyond. As always, please consult with your own tax advisor to see if you can benefit from the strategies discussed here.
We all know that mobile home parks and RV parks kick off tremendous cash flow for the owners. It’s a phenomenal real estate investment. There are many different groups of investors who have been trying to buy as many of these parks as they can get funds to do so. In part what they do is they buy these and then immediately cost seg them for massive income tax savings. Now with 100% bonus deprecation back due to the OBBB, new acquisitions of mobile home and RV parks will provide a tremendous depreciation expense. Often times we see between 60-80% being depreciable in year 1 with these parks (net after backing out the land value since land cannot be depreciated).
If you’re reading this blog post you probably already have a pretty good idea about cost segregation, but in case you don’t, cost segregation is a tax planning strategy where the owner segregates or reclassifies real property into shorter class lives. This allows the owner to take a bigger tax deduction earlier in the ownership of the property.
Mobile home parks and RV parks are some of the best assets for cost segregation. I will often get asked…”how might a specific property do with cost segregation?” I can usually give them a ballpark figure and then have our team run an estimate but other than C-stores and tunnel car washes, there isn’t another asset class that performs as well with cost segregation as does a mobile home park or RV park.
It’s very common for us to see 50-80% of the overall cost be able to be accelerated – i.e. depreciated in the first year of ownership. Let’s say you buy a mobile home park for $2.5 million and maybe the land is estimated to be worth $500,000. That leaves $2 million in cost basis. We would run an estimate for you and note that you could expect $900,000 – $1,500,000 in increase accumulated depreciation expense. But the actual results might reach as high as $1.7 – $1.8 million. Of course we would not know that until we completed the study. So what happens in these situations is many times these owners have other parks that kick off massive cash. They have big tax liabilities because of that. But now they buy this new park, cost seg it and get a $1 million tax deduction in that first year of buying the new mobile home park. They may not need that $1 million depreciation expense to offset the income from this newly acquired park but they do need it to offset the other income from their other parks and properties. And if you end up with more depreciation than you can use, it does just stay on your books as a loss carryforward. You will just eat into that depreciation in the next year and maybe even the following year as needed until the loss is exhausted. A cost segregation study like this might cost somewhere in the neighborhood of $5,000 – $7,000 depending upon the complexity of the property.
What kinds of property can be accelerated? Below is an example of what you might see in a cost segregation study for a mobile home park. If owners have trailer park units that they own, those usually are identified as 5 year class life property. Some owners have us calculate that value while others will put their own values on their trailers and keep them out of the study. In the study noted below, the owner would be able to accelerate $2,141,369.70. At a 37% federal income tax rate, that would be an income tax savings of $792,306. 83% of the cost of the property was able to be reclassified into shorter lives of 5 and 15 years. With 100% bonus depreciation, he was able to take all of this in year 1. I don’t know what this study cost but let’s say it was $6,500 which is an expense – not capitalized cost. That $6,500 after tax is $4,095 making the ROI 193:1….that’s 19000% return on investment. Crazy but it’s legit.
If you’d like to learn more about cost segregation or would like us to run an estimate for you, please reach out. We are happy to run numbers for anyone no matter where you are. There is no charge and no obligation. I can study properties anywhere in the United States and am happy to help.
Be sure to check out the new cost segregation calculator that we recently launched. Scroll down on this page at www.CostSegCalc.com and plug in the information for your asset. You do not need to give us an email to see the results. You will have to reach out to get an official quoted price.
If you own a commercial building, a cost segregation study could significantly reduce what you owe for income taxes. We offer free estimates so you can see the potential savings / deferral and have something inhand to review with your tax advisor.
There’s still time to complete a study before the tax deadlines, but that window is closing fast. I work nationwide and can help you take full advantage of accelerated depreciation strategies.
This morning I thought I’d share some thoughts about cost segregation and try to answer a number of questions that I get from owners and commercial real estate brokers.
Tax Day for 2024 taxes has come and gone. Most building owners have filed for an extension on their taxes giving them 5 more months to get their corporate returns completed and 6 more for their personal returns. Now is the time to get those cost segregation studies completed so they are done well in advance of the true tax deadline.
I do cost segregation studies all over the country. We have a simple process that won’t cause you much headache at all. You can sleep confidently knowing the work was done by experts with a couple of decades of experience.
(July 31, 2025 – This article was originally published March 8, 2025 but has been updated to reflect the change and improvements from the One Big Beautiful Bill that went into law on July 4, 2025).
What just changed since the OBBB? Owners can now go back one more year – basically a one year look-back if you will and take partial asset disposition on their improvements that they did. It can be applied then in the current tax year by using an IRS Change of Accounting Form 3115. Read the details below as to why you might want to do this. It is no longer a “use it or lose it” situation in the year in which you did the work. You have one additional year to take it. So if you did improvements to your buildings in 2024, we can look at taking partial asset disposition on your 2025 tax returns.
Most building owners and their tax advisors miss this KILLER tax deduction. How do I know they miss it? Because they don’t call me to get these studies done. Partial Asset Disposition SHOULD be evaluated every year for every building owner whether you own commercial property or residential investment property. But that’s ONLY if you legally prefer paying LESS in INCOME TAX as well as REDUCE your recapture tax liability down the road in the event you decide to sell your building.
I just finished up one of these recently where it was $280,000 in interior improvements for an office. That seems like pretty standard stuff. Most tax professionals won’t even have this small of a project studied. It was all interior so most would just call it QIP and be done with it. (QIP is Qualified Improvement Property and gets a 15 year class life). In 2024, bonus depreciation was 60% so you could take 60% of $280,000 or $168,000 tax deduction. Awesome. The client just got a $168,000 and all it took was less than 5 minutes of his tax advisor’s time to figure that out. So it didn’t cost him much. Perhaps the tax advisor bills him $100 for his time to figure this out. Everything’s cool, right? Wrong. Wrong in a big way.
If the owner qualified for PAD – partial asset disposition – he should take PAD. (Note: there are some criteria as to if the improvement qualifies for PAD so the owner’s need to double check this with their cost seg firm and tax advisor).
In this scenario above, because the CPA was on top of his game and recalled this idea of a PAD, he reached out to discuss this particular project. We studied the improvement and did the PAD and did you know the owner ended up picking up an additional $118,000 in a deduction because he did PAD? That’s a net tax savings of about $40k after paying for the study. On top of that, since this property identified was tossed in a landfill, it gets removed from the basis of his building so when he goes to sell it, he will have less recapture tax to pay. If you don’t remove the property from your books that has been thrown away, you continue to carry something on your books that actually isn’t there any more. And you’ll end up paying more in recapture tax when you go to sell.
So in this scenario, if you don’t do PAD, not only would you be missing out on about $40k in immediate tax savings, but you’ll pay more in tax (recapture tax) when you go to sell your building.
So next time you are doing building improvement whether it’s interior or exterior and it’s over $100k, please remember to reach out and have a conversation with a cost segregation expert. These studies are not expensive. By doing them you are assuring your accounting and depreciation are being done correctly and you get some significant tax benefits both now and when you sell.
