A study on a single-family rental typically runs $2,500 to $6,500. Most commercial properties fall between $5,000 and $15,000. Large industrial or complex assets run $15,000 to $40,000. Anyone quoting a fee before knowing your square footage, property type, and whether cost records exist is guessing.
The short answer
- Single-family and small residential: $2,500 to $6,500. Most commercial: $5,000 to $15,000. Large industrial and portfolios: $15,000 to $40,000.
- Six factors set the number: square footage, building or unit count, asset complexity, whether cost records exist, site visit logistics, and whether a look-back is needed.
- A $1,500 automated report and a $12,000 engineering study are different products, not the same product at different prices.
- Percentage-of-savings pricing creates a conflict of interest. Insist on a flat engineering fee quoted from scope.
- On a property above the economic threshold, expect a benefit-to-fee ratio of roughly 8:1 to 20:1 on a present-value basis.
What a Study Actually Costs
| Property profile | Typical fee range |
|---|---|
| Single-family rental, small residential, short-term rental | $2,500 – $6,500 |
| Small commercial, under about 20,000 sq ft | $5,000 – $9,000 |
| Mid-sized commercial, multifamily, retail center | $7,000 – $15,000 |
| Large industrial, manufacturing, hospitality, portfolios | $15,000 – $40,000 |
These are ranges for engineering-based studies including a site inspection and a report built to IRS Audit Techniques Guide standards. Two honest providers can land $3,000 apart on the same building. If a quote sits well below these ranges, the question is not why they are cheaper. It is which steps they skip.
What Drives the Number Up or Down
Square footage and building count. Field and takeoff hours scale with area. A 12,000 square foot retail building and a 120,000 square foot distribution center are not the same day of work, and three buildings means three inspections.
Unit count on residential. A 40-unit property requires a representative sample across floor plans, plus common areas and site work.
Asset complexity. The biggest swing factor. A dental office with operatory plumbing, dedicated circuits, and extensive casework takes far more engineering than a warehouse shell of the same size. Restaurants, car washes, and plants carry dense specialty systems.
Whether construction cost records exist. If you built the property and have pay applications and the schedule of values, costs trace directly from source documents. On an acquired building, every component must be estimated from measured quantities and published cost data, then reconciled to basis.
Site visit logistics. A property two hours away costs less to inspect than one requiring flights. Some providers bundle travel; some bill it.
Look-back computation. For a prior-year property, someone must compute the cumulative §481(a) adjustment and prepare Form 3115 workpapers. Expect $500 to $1,500 more. See the Form 3115 catch-up.
What You Get for $1,500 Versus $12,000
A $1,500 automated report typically uses a property type template, benchmark percentages, and no site inspection. Costs are allocated by model rather than measured. There is often no engineer of record, no photographs, no unit-cost detail, and no audit support.
A $12,000 engineering study puts a person on site who measures millwork in linear feet, counts fixtures, traces which circuits serve equipment rather than the building, and measures paving outside. Every allocation carries a documented quantity and unit cost, a legal rationale, photographs, and a reconciliation to actual cost.
That gap matters because the ATG is explicit about what a quality study contains: documented methodology, common nomenclature and standard numbering, the legal analysis, engineering rationale for allocations, indirect cost treatment, and reconciliation to actual costs. You are paying for evidence, not a prettier PDF. Full comparison in engineering-based versus software cost segregation.
Why Contingency Pricing Is a Warning Sign
Some firms price at a percentage of your tax savings. That sounds aligned. It is not.
Compensation becomes a function of how aggressively assets are classified, so every borderline component becomes an argument for the shorter life. The ATG's first element of a quality study is a preparer with construction and tax expertise, and independent judgment runs through all thirteen.
There is a practical problem too. Contingency fees are usually computed on projected first-year deductions, so you can be billed on a number larger than your actual benefit if losses suspend under §469. A flat fee quoted from scope leaves the engineer with no stake in the outcome. More in how to choose a provider.
What the Fee Buys: A Worked Example
Example: a $2,800,000 self-storage facility Land allocated at $400,000, leaving $2,400,000 of depreciable basis. Heavy site work, fencing, security systems, and site lighting bring the reclassification to 34%, or $816,000, all bonus-eligible at 100%. Fee $11,000, combined tax rate 35%. (The additional deduction nets out a simplified full year of 39-year depreciation on those dollars; MACRS applies the mid-month convention to real property, so the real first year depends on your placed-in-service month.)
| Amount | |
|---|---|
| Additional year-one deduction | $795,077 |
| Year-one cash tax reduction at 35% | $278,277 |
| Present value of deductions given up later (8% discount) | ($84,750) |
| Net present value of the acceleration | ~$193,500 |
| Study fee | ($11,000) |
| Benefit-to-fee ratio | ~17:1 |
Your result depends on your tax rate and whether you can use passive losses.
Fees do not scale proportionally with basis, but benefits roughly do. Doubling the basis might raise the fee 40% while doubling the deduction.
| Depreciable basis | Typical fee | Direction of the ratio |
|---|---|---|
| $350,000 | $3,000 | Often below break-even |
| $600,000 | $4,500 | Workable if short-life content is high |
| $1,200,000 | $6,500 | Reliably favorable |
| $3,000,000 | $11,000 | Strongly favorable |
Where the Fee Buys Too Little to Be Worth It
Basis below roughly $500,000 on a plain property. A $340,000-basis townhome reclassifying 11% produces about $37,400 of accelerated deduction. At a 24% rate that is roughly $8,650 of year-one cash, and about $5,300 once you subtract the present value of the deductions you gave up in later years. Against a $3,000 fee the study nets around $2,300, a ratio under 2:1 rather than the 8:1 to 20:1 above. It is not a loss, but it is thin pay for permanently converting $37,400 into §1245 ordinary-recapture exposure and a schedule someone has to maintain for the whole hold. Move one input against you, a lower bracket today, a higher rate at sale, or a suspended loss, and it goes negative. See the minimum property value.
You cannot use the deduction. If the loss suspends under §469 with no passive income and no realistic exit, you pay today for a benefit arriving in an unknown year.
Short hold with no §1031 planned. Selling in eighteen months converts a modest deferral into near-term ordinary recapture.
The property is nearly fully depreciated. Little basis is left to accelerate.
The test-by-test framework is in whether cost segregation is worth it. A good provider runs that math before you pay.
Frequently Asked Questions
Is the study fee tax deductible?
Generally yes. It is ordinarily treated as a professional fee related to your rental or business activity and deducted in the year incurred. Treatment can depend on timing and entity structure, so confirm with your CPA.
Why do quotes for the same building vary by thousands of dollars?
Because scope varies. Physical inspection versus desk review, engineer-prepared versus template-generated, Form 3115 workpapers, travel, and audit support all move the price. Ask for a written scope covering those five items and the quotes become comparable.
Is a cheaper study riskier?
Not automatically, but price tracks documentation depth, and documentation defends the classification. Ask whether the provider performs a site inspection, whether the report reconciles allocated costs to actual costs, and who responds if the IRS asks. Get the answers in writing.
Find Out in 24 Hours Whether a Study Pays for Itself
Not every property justifies a study, and we will tell you when yours doesn't. Send Precision Cost Segregation the address, purchase price, closing date, and your rough tax rate, and we will come back with a modeled reclassification range and an estimated first-year benefit at no cost.
This article is provided by Precision Cost Segregation for general educational purposes and does not constitute tax, legal, or accounting advice. Tax outcomes depend on your specific facts, your tax rate, your passive activity position, and your entity structure. Figures shown are illustrative. Consult your CPA or tax advisor before acting, and engage a qualified professional to perform any cost segregation study. Information is current as of publication.
This article is general information, not tax or legal advice. Depreciation outcomes depend on your facts, elections, and current law — consult your CPA before acting. © 2026 Precision Cost Segregation.