Unlike a house, a residential condo has no land allocation. Every dollar of purchase price qualifies for depreciation analysis — a significant structural advantage.
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Residential investment condos are different from houses — and that difference is a significant tax advantage.
When you buy a house, a portion of the purchase price is allocated to land. Land does not depreciate. In most single-family rental markets, land allocation ranges from 15% to 35% of value.
When you buy a residential condo, you are buying airspace — not land. There is no land allocation. The full purchase price is your depreciable basis, and every dollar qualifies for depreciation analysis.
Inside the condo: carpet and vinyl plank flooring, appliances, ceiling fans, specialty lighting, window treatments, and security systems all qualify for 5-year personal property treatment. The proportionate share of common area site improvements allocates as 15-year land improvements.
Unlike large apartment buildings, individual residential condos are analyzed as the independent investment units they are — with every qualifying component documented to its correct recovery period.
These are the IRS-verified asset classes under Rev. Proc. 87-56 and supporting case law — confirmed across 16,000+ studies. Every component is documented to its correct recovery period with engineering justification, defensible under IRS examination.
Cost Seg America engineers residential investment condo cost segregation studies with one foundational advantage: no land allocation. The full purchase price is the depreciable basis. Our engineering team analyzes 100 cents of every dollar against the 5-year and 15-year schedules. The same components present in every single-family rental — flooring, appliances, lighting, security — are present in every residential condo. The difference is that every dollar of the condo's purchase price qualifies for analysis.
The IRS publishes a 347-page Audit Technique Guide on cost segregation. It identifies Approaches 1 and 2 as the preferred methodologies. Studies priced under $2,900 recover $60,000–$150,000 less per $1 million of depreciable basis than a fully engineered study. Cost Seg America has used IRS Approaches 1 and 2 on every study for 24 years. 125+ IRS audits. Zero losses. $0 ever returned. The methodology is why.
Cost segregation is an IRS-approved engineering analysis that reclassifies components of your residential condo from the default 27.5 yr straight-line depreciation schedule to three shorter recovery periods: 5-year personal property, 7-year personal property, and 15-year land improvements. Every component that qualifies for an accelerated schedule is individually identified, measured, and documented.
With 100% bonus depreciation active under OBBBA for property placed in service after January 19, 2025, every qualifying 5-year, 7-year, and 15-year component can be fully deducted in Year 1. Cost Seg America consistently recovers $60,000–$150,000 more in deductions per $1 million of depreciable basis than studies priced under $2,900.
The typical reclassification rate for residential condo is 20–30% of the depreciable basis. Because residential condos have no land allocation, the depreciable basis equals the full purchase price. On a $600K property, this translates to approximately $55,500 in Year 1 federal income tax savings at a 37% rate.
The One Big Beautiful Budget Act (OBBBA) restored 100% bonus depreciation for qualified property placed in service after January 19, 2025. With 100% bonus depreciation, every qualifying 5-year, 7-year, and 15-year component identified in your study is fully deductible in the year you place the property in service. Your CPA determines your eligibility based on your individual tax situation, passive activity rules, and other factors.
Yes. The IRS allows you to go back and claim deductions you never took on prior-year properties using a Form 3115 change in accounting method — without amending previous returns. The catch-up deductions are taken entirely in the current tax year. Cost Seg America applies lookback analysis as standard practice. We partner with a trusted CPA specialist who handles the Form 3115 filing.
Cost Seg America's minimum qualifying property value is $200,000. Below this threshold, the engineering cost typically exceeds the tax benefit. Above $200,000, the fee-to-benefit ratio is consistently favorable and grows substantially with property value.
Unlimited audit defense means if the IRS examines your cost segregation study — this year, five years from now, or ten years from now — Cost Seg America responds. Written responses and phone representation. No time limit. No hour cap. No additional fee. Ever.
In 24+ years and 125+ IRS audits, Cost Seg America has never lost an audit and has never returned a dollar to the IRS.
Cost Seg America doesn't just find the deductions — we document them to survive the most demanding IRS examination.