What is a cost segregation study and how does it save me money?
A cost segregation study is an engineering-based tax analysis that reclassifies components of your real estate from the standard 27.5- or 39-year depreciation schedules into shorter 5-, 7-, or 15-year categories. This accelerates your depreciation deductions, significantly reducing your taxable income in the early years of ownership. Massachusetts property owners typically see first-year savings ranging from $30,000 to several million dollars, depending on property size.
Which types of properties qualify for a cost segregation study in Massachusetts?
Any income-producing property with a depreciable building basis of $300,000 or more qualifies. This includes single-family rentals, multi-family properties, apartment complexes, commercial office buildings, retail centers, hotels, industrial facilities, self-storage warehouses, medical offices, restaurants, and short-term rentals on platforms like Airbnb. Massachusetts properties across Boston, the South Shore, Cape Cod, and beyond are all eligible.
How much does a cost segregation study cost in Massachusetts?
Study fees vary based on property size and complexity. Entry-level properties ($300K–$1M) typically range from $3,000–$12,000; medium properties ($1M–$3M) from $10,000–$20,000; large properties ($3M–$10M) from $15,000–$30,000; and very large properties ($10M+) from $30,000–$60,000+. ROI ratios typically range from 10:1 to 25:1, and every study includes a free preliminary savings estimate so you can confirm the numbers work before committing.
I bought my Massachusetts property several years ago — can I still benefit from cost segregation?
Yes. A lookback cost segregation study allows you to capture all missed depreciation on properties placed in service up to 15 years ago — without amending prior tax returns. Using IRS Form 3115, all backdated deductions are claimed in a single current tax year. The process and cost are essentially the same as a standard study, and the savings can be substantial even for older acquisitions.
How long does a cost segregation study take to complete?
Seneca completes most studies within 2–4 weeks — roughly twice as fast as the industry standard of 4–8 weeks. Virtual property tours, which take 30–45 minutes via video call, typically produce results in 2–3 weeks. For clients with urgent tax deadlines, rush service is available and can deliver a completed study in as little as one week, with adjusted pricing based on the turnaround required.
Will a cost segregation study increase my risk of an IRS audit?
Cost segregation is a well-established, IRS-recognized tax strategy when performed by qualified engineers following proper methodology. Seneca's engineering-based approach strictly adheres to IRS guidelines, resulting in a low audit risk profile. Additionally, every study includes the Seneca AuditDefense guarantee at no extra cost — covering you for the entire duration of property ownership, with a potential study-cost refund if a material issue ever arises.
Do I need to replace my current CPA to use cost segregation?
No. Seneca works alongside your existing CPA or tax advisor. After delivering your study, our team coordinates directly with your accountant to review the report, implement depreciation schedules into your current or prior-year returns, and provide Form 3115 support where needed. This post-study CPA coordination is included at no additional charge, ensuring seamless integration into your existing tax strategy.
What is the average first-year tax savings Seneca clients achieve?
Seneca's average client achieves a first-year deduction of $171,243. ROI ratios typically range from 10:1 to 25:1 — meaning for every dollar spent on the study, clients typically recover $10–$25 in tax savings. Actual savings depend on the property's depreciable basis, asset type, and your individual tax situation, which is why we provide a free preliminary savings estimate before any commitment is made.