Services
Cost Segregation Studies for Real Estate Owners in DFW and Texas
Parr & Ibarra CPA provides cost segregation services for real estate investors, commercial property owners, and business owners throughout Hurst, Keller, Grapevine, Addison, Southlake, and the greater Dallas-Fort Worth area. We help clients determine whether cost segregation makes sense as part of their overall tax strategy, and we manage the study process from start to finish — whether performed in-house or in coordination with a qualified third-party engineering firm.
A deduction today is worth more than the same deduction years from now. Accelerating depreciation improves cash flow, frees up capital for reinvestment, and can meaningfully reduce your current-year tax burden — which is why cost segregation is one of the most impactful tax planning strategies available to Texas real estate owners.
What Cost Segregation Can Look Like in Practice
Every property is different, but a real engagement illustrates the potential impact of this strategy.
We worked on a real estate acquisition with a purchase price of approximately $8.9 million. Through cost segregation and bonus depreciation, the first-year deduction was approximately $8.2 million. At a 37% tax rate, that represents roughly $3 million in potential tax savings — in year one.
Without a cost segregation study, those deductions would have been spread across 27.5 or 39 years. The tax savings would have been the same in total, but the timing would have cost the property owner the use of that capital for decades.
Not every property will generate results at this scale. The impact depends on the purchase price, property type, construction composition, applicable bonus depreciation rules, and the owner’s individual tax situation. But for real estate owners with significant properties, the difference between standard depreciation and an optimized cost segregation study can be substantial.
Related Articles
Insights
- All Posts
- Cost Segregation
If you own commercial property, a rental portfolio, or a business facility in Texas and you have not looked into...
The rules surrounding cost segregation are a bit complicated and are easily misinterpreted, resulting in improper allocations, and possibly incorrect...
A cost segregation study is a powerful tax planning tool for real estate investors and owners. This method allows for...
Ways We Can Help
Our Services
Parr & Ibarra’s cost segregation services are designed for real estate investors and property owners throughout DFW and Texas who want to maximize the tax value of their real estate holdings. Our team manages each engagement from initial analysis through final reporting, coordinating the technical, accounting, and tax return components so the study is both accurate and audit-ready.
Cost Segregation Study
A full cost segregation study breaks down a property’s components and identifies assets that qualify for shorter depreciation lives. Using a combination of accounting expertise and engineering analysis, we reclassify building components to the correct depreciation schedules, produce detailed documentation, and ensure the study is properly reflected on your tax return.
Bonus Depreciation Planning
Bonus depreciation rules allow qualified property to be deducted at an accelerated rate in the year it is placed in service. We coordinate cost segregation results with current bonus depreciation schedules to maximize the first-year deduction available to you, taking into account phase-down rules and your overall tax position.
Catch-Up Depreciation (Look-Back Studies)
If you have owned a property for years and never had a cost segregation study done, it may not be too late. In many cases, property owners can capture missed depreciation through a look-back study without amending prior tax returns. The catch-up deduction is taken in the current year through a change in accounting method, which can produce a significant deduction even for properties that have been held for several years.
New Construction and Renovation Studies
Cost segregation is not limited to property acquisitions. If you have recently completed a new construction project or made significant improvements to an existing property, a cost segregation study can identify components of that construction or renovation that qualify for accelerated depreciation.
Audit-Ready Reporting
Every cost segregation study we deliver includes detailed, audit-ready documentation that supports the reclassifications taken on your return. We maintain the records necessary to substantiate the study if questioned by the IRS or a state taxing authority.
Who Should Consider a Cost Segregation Study
Cost segregation is not the right strategy for every property or every owner. It tends to provide the most benefit for:
Commercial real estate owners
with properties valued at $1 million or more
Residential rental property investors
with significant portfolios or high-value acquisitions
Business Owners
who own their facility outright or through an entity they control
Investors who recently acquired or constructed a property
and want to maximize first-year deductions
Long-term property holders
who have never had a study done and want to evaluate catch-up depreciation
Real estate developers
completing new construction or significant renovation projects
Texas investors
evaluating the after-tax cash flow on a pending acquisition
If you own real estate and are in a meaningful tax bracket, cost segregation is worth evaluating before your next tax filing. The analysis is straightforward, and the cost of the study is typically a small fraction of the tax savings generated.
Frequently Asked Questions
Knowledge Center
What is cost segregation and how does it reduce taxes?
Cost segregation is an IRS-approved tax strategy that accelerates depreciation deductions on commercial real estate. Normally, commercial buildings are depreciated over 39 years. A cost segregation study identifies components of the property — flooring, lighting, specialty plumbing, land improvements, and other elements — that qualify for 5, 7, or 15-year depreciation instead. Accelerating those deductions into earlier years reduces taxable income now, improving cash flow and the after-tax return on your real estate investment. For a property purchased for $2M or more, a cost segregation study can generate six figures in additional depreciation deductions in the first year.
What types of properties qualify for cost segregation in Texas?
Most commercial real estate qualifies — including office buildings, retail centers, restaurants, medical facilities, warehouses, industrial properties, hotels, apartment complexes, and mixed-use developments. The strategy is available for newly constructed properties, recently purchased existing properties, and properties that have undergone significant renovation. Texas real estate investors and business owners who own their commercial space are among the most common beneficiaries, particularly given the volume of commercial development across the DFW metroplex in recent years.
How much does a cost segregation study cost, and is it worth it?
Study fees typically range from $5,000 to $15,000 depending on property size and complexity. The return on that investment is evaluated by comparing the fee to the present value of the additional depreciation deductions accelerated. For most commercial properties valued at $500,000 or more, the tax savings generated in the first year alone significantly exceed the cost of the study. We perform a feasibility analysis before recommending a study to ensure the economics make sense for your specific property and tax situation.
Can I do a cost segregation study on a property I purchased years ago?
Yes. A lookback study allows property owners to claim the depreciation they missed in prior years without amending past returns. The catch-up deduction is taken in the current tax year as a one-time adjustment — called a Section 481(a) adjustment — and can generate a substantial deduction even on a property owned for many years. If you purchased commercial real estate in the DFW area and have never had a cost segregation study performed, the missed depreciation may be recoverable.
How does bonus depreciation interact with cost segregation?
Bonus depreciation allows qualifying property to be deducted in the year it is placed in service rather than over its useful life. When combined with cost segregation — which reclassifies building components into shorter-life categories that qualify for bonus depreciation — the result can be a very large first-year deduction. Bonus depreciation has been phasing down from 100% (available through 2022) and the current percentage depends on the tax year in question. We model the interaction between cost segregation and bonus depreciation as part of every study to maximize the timing and magnitude of your deductions.
More FAQs here.
Contact Us
Talk to a Cost Segregation Specialist in Hurst, Keller, Grapevine, or Addison
If you own real estate in the Dallas-Fort Worth area or anywhere in Texas and want to understand whether cost segregation makes sense for your situation, our team is ready to help. Parr & Ibarra CPA works with real estate investors, commercial property owners, and business owners throughout Hurst, Keller, Grapevine, Addison, Southlake, and across DFW and Texas.
The analysis starts with a conversation about your property and your tax situation. There is no pressure to move forward until you understand what the study would involve and what it is likely to generate. Take a few minutes to tell us about your property and your goals.
Ready to move forward? Submit an RFP.
