How Much Does a Cost Segregation Study Cost? Pricing Guide
What Determines the Cost of a Study?
The cost of a cost segregation study varies based on several factors, including property value, property type, the complexity of the building, and the provider you choose. Understanding these factors helps you evaluate pricing and make an informed decision.
Property value is the primary driver. Larger, more valuable properties have more components to identify and classify, requiring more engineering analysis. Property type matters as well: a fully furnished vacation rental with extensive outdoor improvements will have more reclassifiable components than a basic unfurnished rental, potentially requiring more detailed analysis.
Typical Pricing Ranges
For residential rental properties, cost segregation studies typically range from $2,500 to $5,000 for a single property. Some providers charge based on a percentage of the property value, while others (like Stratum) use flat-fee pricing for transparency and predictability.
Stratum's pricing is straightforward: $3,500 for a single property study, $2,900 per property for portfolios of 3-5 properties, and custom pricing for enterprise clients with 6 or more properties. There are no hidden fees, no hourly charges, and no surprise invoices.
Evaluating Return on Investment
The critical question is not how much the study costs, but how much it saves. For a $400,000 rental property, a cost segregation study might identify $80,000 to $120,000 in accelerated deductions. At a 32% marginal tax rate, that translates to $25,000 to $38,000 in tax savings. Even at the lowest end, the return on a $3,500 study is more than 7x.
The study fee itself is tax-deductible as a business expense, further improving the economics. When you factor in the time value of money and the ability to reinvest the tax savings, the return on investment is compelling for virtually any residential property above $150,000 in value.
Red Flags in Pricing
Be cautious of cost segregation providers who charge very low fees ($500-$1,500) for what they claim is a full engineering study. These are often template-based reports that use percentage estimates rather than component-level analysis. They may not withstand IRS scrutiny and could create problems if your return is examined.
On the other end, be wary of providers who charge premium fees ($7,000-$15,000) for residential properties without clear justification. Unless the property is highly complex or valued above $1 million, residential studies should not require that level of investment.
Making the Decision
If your property has a depreciable basis above $150,000, the math almost always works in your favor. Request a free estimate from Stratum to see your specific potential savings before committing. We will provide a preliminary analysis at no cost so you can make an informed decision.