Restaurant buildings have the highest personal property density of any commercial asset class. The kitchen alone can justify the entire cost segregation study.
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Restaurant buildings are the most personal-property-intensive structures in commercial real estate — and most restaurant owners depreciate them like generic office buildings.
The commercial kitchen infrastructure is where it starts. Exhaust hoods are not building components — they are process equipment. Grease ductwork, make-up air systems, gas distribution to cooking equipment, dedicated electrical for kitchen appliances — all of this qualifies for 5-year treatment. In a full-service restaurant, kitchen infrastructure alone can represent $400,000–$1,000,000 in 5-year property.
The dining room and bar add another layer: specialty and decorative lighting, bar infrastructure, AV systems, and POS network cabling all qualify. Flooring throughout — tile, hardwood, epoxy — is personal property at 5 years.
Restaurant properties routinely produce reclassification rates of 35–50% — the highest of any standard commercial property type.
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 has engineered cost segregation studies on restaurants ranging from quick-service to full-service to multi-unit portfolios. Commercial kitchen infrastructure — exhaust hoods, grease ductwork, make-up air systems, dedicated gas distribution — qualifies as 5-year process equipment. This single distinction is frequently the largest component of a restaurant cost segregation study. Our engineering team traces every kitchen system to its correct IRS classification.
The IRS publishes a 347-page Audit Technique Guide on cost segregation. It identifies Approaches 1 and 2 as the preferred methodologies — the ones that require direct cost identification, component-by-component analysis, and engineering documentation. IRS Approach 5, which most firms use, applies software modeling and industry averages. The IRS wrote the preference into the guide. The firms that use IRS Approach 5 made a business decision — faster to produce, cheaper to deliver, better for their margins. Studies priced under $2,900 recover $60,000–$150,000 less per $1 million of depreciable basis than a fully engineered study. That is not our claim. That is the arithmetic of counting every component versus estimating from averages. 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 restaurant property from the default 39 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 — not estimated from an industry average.
With 100% bonus depreciation active under the One Big Beautiful Budget Act (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 — rather than spread over the default depreciation schedule that could take decades.
Cost Seg America consistently recovers $60,000–$150,000 more in deductions per $1 million of depreciable basis than studies priced under $2,900 — because a software-based study applies industry averages while an engineered study counts every component in your actual building. Every year without a study is a year that gap grows.
The typical reclassification rate for restaurant is 35–50% of the depreciable basis — the highest of any standard commercial property type, driven by commercial kitchen infrastructure. On a $4M property, this translates to approximately $477,000 in Year 1 federal income tax savings at a 37% rate. Actual results vary based on the specific property, construction type, and individual tax situation. Cost Seg America provides a free preliminary estimate with no obligation.
The One Big Beautiful Budget Act (OBBBA) restored 100% bonus depreciation for qualified property placed in service after January 19, 2025. That single provision transforms cost segregation from a long-term tax planning strategy into an immediate Year 1 event.
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. The entire deduction lands on your return in Year 1. 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. Contact us for a free 24-hour preliminary estimate — no obligation.
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. The studies are engineered to withstand examination from the start — which is why unlimited defense is included as standard.
Cost Seg America doesn't just find the deductions — we document them to survive the most demanding IRS examination.