What is Cost Segregation?

When acquiring, renovating or building real estate, most taxpayers tend to overstate the amount of 39-year real property. This limits the depreciation deductions available to taxpayers in the early stages of their investment. A cost segregation solves this problem by reclassifying assets by maximizing the property eligible for treatment as 5-, 7- or 15-year property. This depreciation optimization frees up substantial cash flow.

If your clients own any property held for a business purpose, it is likely subject to depreciation and may benefit from a review. This includes both new and existing properties. Commonly overlooked opportunities include: Hotels, Offices, Manufacturing Facilities, Retail Units, Assisted Living Facilities, Tenant Improvements, and Multifamily Units.

Learn why leading CPAs choose McGuire Sponsel

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What Makes a Great Prospect?

Studies can be performed for current year transactions or on a retroactive basis. While every client is unique, we typically see a consistent benefit when the following criteria are met:

  • Acquisition or New Build in excess of $750,000
  • Interior renovation in excess of $200,000
  • Companies with large fixed asset schedules
  • Companies that renovate or make repairs frequently

Why Clients Trust our Team

Our philosophy begins with focus on the CPA-client relationship, ensuring expectations are set to maximize the client benefit. This is often a reason CPAs continue to partner with us. Our technical approach employs civil, structural and architectural engineering coupled with tax law experience to identify components that qualify for accelerated depreciation. The blend of engineering and tax code expertise provides tremendous value. In addition, we perform a site inspection for every study and all costs, along with their classifications, are then documented to withstand IRS scrutiny.


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If a property has been acquired, newly built, or renovated, please connect with our practice leaders.


Case Study: Beverage Distribution Facility

McGuire Sponsel was recently engaged to perform a Cost Segregation study on a newly built $16 million distribution facility in North Carolina.

Our team started by conducting a tour of the 168,000 sq.ft. facility. Based on the detailed site visit and subsequent calculations using blueprints and invoices, McGuire Sponsel successfully reclassified over 30% of the construction costs into 5 and 15 year property. This generated an increase to the first year cash flow in excess of $1.3 million with a NPV of cash flows over the life of the investment exceeding $840,000.


Words From Our Clients

“Our clients are very happy with McGuire Sponsel. They offer a great combination of attributes. They are knowledgeable, thorough, responsive, fairly priced and easy to work with. They can handle large projects and small questions. We’re a “team” both trying to service the clients.”

William Richardson, Partner | Sisterson

“McGuire Sponsel has been extremely responsive to both the needs of our firm and most importantly the needs of our clients. They have not only helped us and partnered with us to deliver tremendous value to our clients but they make my job easier by allowing us to draw on the expertise of a team.”

Jeff Drummonds, Managing Shareholder | LBMC PC

“McGuire Sponsel’s focus on client service is excellent and it seems obvious to me that they understand everything they are working on for us. I have confidence in what they are recommending.”

Brad Hamrlik, Director of Tax | Cortland

“McGuire Sponsel is a true partner to us and we have confidence in their ability to bring value to our clients. In fact, we bring them in without hesitation whenever possible because we know they are a valued resource to our firm”

Robert Berger, Partner | Anders

“I am confident in the work they do and know it’s done right. McGuire Sponsel is a top notch firm.”

Terry Niegel, Partner | Kernutt Stokes