Why Partner Selection Can Make or Break Your Cost Segregation Results
Not long ago, I spoke with the CFO of a 14-property hospitality group operating midscale hotels in secondary markets across the Midwest and Southeast.
For years, they had relied on a one-size-fits-all provider who handled their tax work but outsourced cost segregation to a generic contractor. The resulting reports overlooked key building-use nuances, such as the significant proportion of kitchen, laundry, and parking lot assets that could have been shifted into 5- and 15-year categories.
After introducing them to a firm with deep hospitality and mixed-use expertise, they re-evaluated three of their largest properties. The updated studies unlocked nearly $900,000 in accelerated depreciation in the first year alone, giving them the cash flow to renovate guest rooms ahead of schedule.
That reinforced a lesson I’ve seen play out across industries: cost segregation is only as effective as the team performing it.
This list highlights the companies delivering the most consistent, audit-ready, and ROI-driven results in 2025.
Quick Take: Three Standout Picks for 2025
1) RE Cost Seg – Best for Integrated Tax Strategy
- Engineering plus tax expertise
- Local and national reach
- Clear, actionable deliverables
2) Engineered Tax Services – Best for Technical Rigor Nationwide
- Licensed engineering firm
- Detailed blueprint analysis
- Remote study capabilities
3) Madison SPECS – Best for Investor-Centric Service
- Transparent reporting process
- Thorough site inspections
- Free feasibility analysis
For the full breakdown of all eight companies and their specialties, keep reading below.
Six Factors to Weigh Before Hiring a Cost Segregation Firm
A few years back, I met a commercial property owner who had just finished building a 120,000-square-foot distribution center in Texas. They chose the cheapest cost segregation bid they could find: a small out-of-state outfit that promised a “desktop study” with no site visit.
The report arrived in less than a week, but it was riddled with vague asset descriptions and lacked the engineering detail needed to stand up to scrutiny. When the IRS later requested supporting documentation, the provider stopped responding entirely. T
The owner had to commission a second study from a reputable firm, which not only met compliance standards but also uncovered an additional $400,000 in accelerated deductions the first report had missed.
The lesson was costly but clear: the wrong provider can leave money on the table and expose you to audit risk.
1. Confirm Specialization in Your Property Type
Industry-specific expertise matters. A retail developer, for example, benefits from a provider who understands the tax treatment of tenant improvements, parking structures, and specialized lighting. The nuances of asset categorization can significantly shift depreciation outcomes.
2. Look for Engineering-Based Field Work
The most accurate studies come from engineering-backed site inspections rather than solely relying on construction cost estimates. Field work ensures that all qualifying assets, from HVAC systems to site improvements, are properly classified.
3. Review Their Audit Defense Record
Choose a firm willing to stand behind its work with full IRS audit support. Ask for examples of prior audit defenses and request documentation standards before committing.
4. Assess Report Format and Clarity
A strong report should be accessible to both CPAs and property owners, with clear schedules, asset breakdowns, and methodology notes. Clarity here makes integration into tax filings faster and less error-prone.
5. Evaluate Turnaround Time vs. Accuracy
Some firms promise delivery in days, but rushing a study often means missing eligible assets. Look for providers who balance efficiency with thoroughness, particularly for high-value or complex properties.
6. Check for Multi-State and Portfolio Capabilities
If your holdings span multiple states, your provider should have proven experience navigating varying regulations and coordinating large-scale, multi-property studies without sacrificing consistency.
The 7 Best Cost Segregation Companies in 2025
1) RE Cost Seg – Best for Full-Service Tax Strategy Integration
- Founded: 2022
- Headquarters: Houston, Texas
Why RE Cost Seg is the best cost segregation company: RE Cost Seg approaches cost segregation as a strategic lever, not just a compliance exercise. Their model combines engineering precision with advanced tax planning, ensuring that asset reclassification is aligned with a client’s broader cash flow and investment goals. This integration means the studies are not isolated documents but actionable tools that tie directly into long-term tax strategy.
With a national service footprint and localized market insight, RE Cost Seg is equally adept at handling a single multifamily property in one state or a multi-asset portfolio across the country. Their engineering studies are detailed and audit-ready, with deliverables designed for easy integration into CPA workflows.
Clients frequently highlight the firm’s emphasis on ROI measurement, showing exactly how accelerated depreciation impacts liquidity and reinvestment capacity. This results-driven approach has made RE Cost Seg a trusted choice for investors, developers, and owner-operators seeking both compliance confidence and measurable financial benefits.
2) Engineered Tax Services – Best for Technical Rigor Nationwide
- Founded: 2001
- Headquarters: West Palm Beach, Florida
Engineered Tax Services (ETS) operates as a licensed engineering firm, which gives them a structural and technical depth not always found in tax-focused providers. Their methodology blends blueprint analysis, site inspections, and IRS-compliant engineering principles to deliver precision in asset reclassification.
ETS has a national footprint, serving clients in every state and across multiple property classes, from large-scale hospitality projects to specialized medical facilities. One of their distinguishing features is their Tele-Engineering™ option, allowing remote collaboration through video technology without sacrificing the detail of an on-site inspection.
The firm completes thousands of cost segregation studies annually and is known for pairing its technical reports with tax advisory insight, making their work practical for CPA integration.
3) Madison SPECS – Best for Investor-Centric Service
- Founded: 2004
- Headquarters: Lakewood, New Jersey
Madison SPECS focuses exclusively on cost segregation, positioning itself as a dedicated partner for property owners and real estate investors. As an affiliate of Madison Commercial Real Estate Services, the firm draws on deep real estate market knowledge while maintaining a singular focus on engineering-based depreciation studies.
Their process begins with a free feasibility analysis, followed by thorough site inspections, detailed photo documentation, and blueprint review. Each report is delivered in a format that is both CPA-friendly and investor-oriented, providing a high-level summary alongside granular asset schedules.
Madison SPECS uses standardized methodologies rooted in IRS guidelines, supported by data sources like RS Means, to ensure both compliance and maximum benefit.
4) KBKG – Best for Complex, Multi-State Compliance
- Founded: 1999
- Headquarters: Pasadena, California
KBKG has built a strong reputation for navigating the challenges of multi-state portfolios, where differing tax rules and reporting requirements can complicate cost segregation. Their team includes both engineers and tax specialists, allowing them to deliver studies that are technically precise while also aligned with state-specific regulations.
With offices across the country (including California, Georgia, Illinois, Texas, and New York), KBKG offers consistent service to clients with geographically diverse holdings. They also provide proprietary tools such as the Residential Cost Segregator® for smaller projects, giving property owners scalable options.
The firm is particularly well-regarded for its audit defense capabilities, with documented methodologies and workpapers that meet or exceed IRS standards.
5) ELB Cost Seg – Best for Small-to-Mid-Sized Commercial Projects
- Founded: 2001
- Headquarters: New Port Richey, Florida
ELB Cost Seg specializes in delivering cost segregation studies for small-to-mid-sized commercial properties, a segment often underserved by larger national firms. Their approach is built around accessibility and responsiveness, ensuring that owners of projects under $10 million still receive engineering-grade analysis and audit-ready documentation.
The firm conducts thorough site inspections and uses engineering-based asset classification to identify opportunities for accelerated depreciation that might be overlooked in a purely desktop study. Their deliverables are straightforward and CPA-friendly, making integration into existing tax workflows seamless.
ELB also offers competitive turnaround times without sacrificing detail, a valuable asset for property owners working within tight tax filing deadlines.
6) McGuire Sponsel – Best for CPA Collaboration
- Founded: 2007
- Headquarters: Indianapolis, Indiana
McGuire Sponsel was founded with a mission to serve as an extension of CPA firms, providing specialized tax services without competing for core accounting relationships. Their cost segregation practice reflects that philosophy, delivering engineering-based studies with a strong emphasis on documentation quality and CPA integration.
The firm’s team blends civil, structural, and architectural engineering expertise with deep tax code knowledge. Each study includes site visits, blueprint analysis, and rigorous asset classification aligned with IRS guidelines. Reports are packaged in a way that facilitates smooth handoff to accounting teams, ensuring deductions are implemented correctly and efficiently.
7) CSSI (Cost Segregation Services, Inc.) – Best for Rapid Multi-Property Turnaround
- Founded: 2000
- Headquarters: Baton Rouge, Louisiana
CSSI has built its reputation on delivering speed and scale without compromising IRS compliance. With more than 50,000 studies completed nationwide, the firm is well-equipped to handle large, geographically dispersed property portfolios.
Their process begins with a no-cost initial analysis, followed by engineering-based site inspections and asset classification. The combination of an experienced engineering team and streamlined workflows allows CSSI to deliver reports quickly, an advantage for property owners working against tax filing deadlines or aiming to apply deductions in the current year.
Beyond cost segregation, CSSI also offers complementary tax services, such as 179D energy deductions and R&D credit studies, enabling clients to capture multiple incentives in a single engagement.
8) Duffy + Duffy Cost Segregation Services – Best for Industrial and Manufacturing Assets
- Founded: 2002
- Headquarters: Westlake, Ohio
Duffy + Duffy Cost Segregation Services was one of the first dedicated cost segregation firms in Ohio and has since expanded to serve clients nationwide. Founded by CPA Dennis Duffy, the company brings together accountants, construction engineers, and cost estimators to deliver studies that meet the technical and documentation standards required by the IRS.
The firm has a particular strength in industrial and manufacturing facilities, where specialized equipment, heavy utility systems, and complex site improvements can represent significant accelerated depreciation opportunities. Their methodology includes on-site inspections, blueprint reviews, and detailed photographic records to support every asset classification.
Turning Cost Segregation Into a Strategic Advantage
Cost segregation is one of the most effective ways to unlock capital from existing real estate holdings, but its true value depends on the expertise and precision of the provider. The right partner does more than reclassify assets; they help ensure compliance, strengthen audit readiness, and align tax benefits with broader financial goals.
The eight firms featured here represent a range of strengths, from hospitality-specific insight to nationwide engineering precision. Whether the priority is rapid turnaround, multi-state compliance, or investor-focused service, each of these companies delivers a proven process for maximizing allowable deductions.
For property owners, developers, and investors, choosing a cost segregation partner is less about finding a vendor and more about selecting a strategic ally. With the right expertise in place, accelerated depreciation can move from being a tax tactic to a long-term driver of liquidity, reinvestment, and competitive advantage.
