Cost Segregation Studies


Cost Estimating Capabilities

Nelson Engineering provides cost estimating services spanning the full spectrum of estimate classes. For design projects, we develop estimates in MasterFormat and/or UNIFORMAT, ready for contract bid. On facility condition assessments, we generate rough order of magnitude (ROM) estimates to address deficient facility conditions. Our certified cost estimators (CPE) ensure our estimates comply with American Association of Cost Engineering (AACE), ASTM E2516-11 Standard for Cost Estimate Classification System, and the American Society of Professional Estimators (ASPE) guidance. Cost estimating is an important component of Cost Segregation Studies. (read more)

By The Numbers
  • CSS services since 2003
  • 1,700 Cost Segregation Studies performed
  • Segregated over $7.8 billion in assets
  • Segregated property costs range from $500K to $632M
  • Performed work in over 40 states

Cost Segregation Studies

What is a Cost Segregation Study?

A Cost Segregation Study (CSS) is an in-depth study of new construction or existing property renovation. A CSS analyzes new or existing property and optimally classifies depreciable assets to generate cash flow tax savings. We identify assets eligible for accelerated depreciation so the property owner can realize faster recovery of capitalized costs and near-term tax savings.

Cost Segregation Studies identify, segregate, and reclassify project-related costs currently classified as real property to shorter depreciable tax lives. We are experts in understanding IRS rulings and procedures that allow taxpayers to change accounting methods and take advantage of these previously understated depreciation expenses back to 1987 without amending tax returns.

Primary Benefits of a Cost Segregation Study

  • Increased current cash flow through accelerated tax depreciation
  • Permanent net present value savings on tax depreciation
  • Independent third-party analysis withstands IRS scrutiny

    View our video blog post on Cost Segregation Studies

    Cost Segregation Image of Video for webpage

    Since 2003, Nelson has provided engineering-based CSS services. We have performed CSS services for almost every type of commercial, institutional, and industrial property.

    The IRS Audit Techniques Guide highlights two primary CSS approaches, both engineering-based: the detailed cost approach and the cost estimate approach. Our engineering reports use both approaches. Our reports accurately document the client’s depreciable tax position in a layered report format. Report sections include detailed cost schedules with accurate cost and tax references, in-depth narrative sections describing the purpose and scope of the project, theory and definitions, our approach and procedures, terms and definitions, our conclusions and recommendations, and a comprehensive photograph file from our site assessment. Our layered approach checks all the IRS boxes for a sound report methodology and greatly reduces audit risk.

    I can provide a project’s net present (NPV) value and return on investment (ROI) calculations for any property, free of charge. Our fees, presented with the NPV and ROI, are firm, fixed price (FFP), regardless of the study outcome. Please contact me with any cost segregation or engineering-based tax services questions.”

    Tom James, CPE

    Program Manager


    Emergency Care Facility

    2018 New Construction Emergency Care Facility

    Great CSS candidate with favorable results. Real property assets qualifying for accelerated depreciation include all mechanical, electrical, and plumbing systems supporting specialized treatments.

    CSS Results for Emergency Care Facility
    Luxury Hotel

    Luxury Hotel

    Property contains two restaurants, two bars, multiple conference rooms, a spa, and 216 guest rooms. The 143,173 gross square foot building was constructed in 2008.

    CSS Results for Luxry Hotel

    National Park Service Project Scoping Assessments (PSA)

    PSA condition assessments include NPS Class B and C construction estimates. In 2019, we completed 29 PSAs for 14 NPS sites in the Southeast, Northeast, and National Capital Regions.

    Converter Compressor Plant

    NASA KSC Nitrogen and Helium Converter Compressor Facility

    Design renovations include construction bid tender cost estimates. Facility upgrades support the Space Launch System (SLS) Program and commercial spaceflight clients throughout the Cape Canaveral Spaceport.