Cost segregation for multifamily & apartment buildings
An apartment building is a 27.5-year residential shell wrapped around hundreds of repeated, replaceable finishes. Every unit carries the same appliances, cabinets and flooring, and the site outside the walls — drives, pool, landscaping — behaves like its own short-life property. The reclass opportunity is real, but the line between what moves and what stays structural is exactly where apartments get audited.
| Typical market range | 12–30% |
|---|---|
| Typical market fee | $5k–20k |
| Recovery periods captured | 5-, 7- and 15-year vs the 27.5-year shell |
| Top-ranked provider (our rubric) | Cost Seg Smart |
| Delivery | Engineering-based; virtual or on-site depending on the provider |
1What reclassifies in a multifamily property
In a multifamily property, cost segregation typically reclassifies 12–30% of depreciable basis out of the 27.5-year building shell into 5-, 7- and 15-year property. The components that recur:
| Component | Recovery period | Authority carried (with caveat) |
|---|---|---|
| Unit appliances (ranges, refrigerators, dishwashers, disposals) | 5-year | Personal property (Asset Class 57.0) — freestanding and unit-serving; built-in status and whether the item is a permanent part of the structure decide it on the facts. |
| Cabinetry, countertops & unit-level finish carpentry | 5- or 27.5-year | May qualify as personal property where removable and not a structural component; built-in millwork that finishes the dwelling generally stays in the residential shell. |
| Carpet & removable floor coverings | 5-year | Personal property when tacked or glued-down and periodically replaced; ceramic tile and other permanent flooring generally remains structural. |
| Site amenities — pool, clubhouse FF&E, playground, grills | 5- or 15-year | Pool shell and hardscape are land improvements (Asset Class 00.3); loose clubhouse furniture and equipment are 5-year personal property; the split depends on what is affixed. |
| Parking, drives & surface paving | 15-year | Land improvements — scales with paved site area; excavation and rough grading tied to the building stay non-depreciable. |
| Landscaping & irrigation | 15-year | Land improvements when they improve the site and are not integral to the building; raw land value is never depreciable. |
| Site lighting, signage & fencing | 15-year | Land improvements serving the site rather than a building system; area lighting affixed to the structure may follow the building instead. |
2Typical results and what drives the spread
A typical range for multifamily properties runs 12–30% — general industry experience for this property type, not an output of our engine. Unit count, finish level and how much of the site is paved or amenitized drive the spread. Either way this is not a promise for any specific building — see by the numbers.
3By the numbers (original data)
4What a study costs for this type
Study fees track building size, documentation quality and whether an on-site inspection is performed. A multifamily property study typically runs in the $5k–20k range — an indicative band, not a quote, since the fee scales with depreciable basis. See the pricing guide for how Cost Seg Smart's fees scale by basis and which providers publish prices at all; most competitors are quote-only.
5Provider comparison — the Top 5 for this asset class
Every provider below is scored on the same fixed rubric, weighting relevant multifamily (5+) evidence most heavily. Facts are drawn from each provider's public materials and dated.
| Provider | Score* | Relevant multifamily (5+) evidence | Profile | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost Seg Smart site owner Engineering-first Best published pricing Best for virtual delivery Most transparent turnaround | 8.9How this score is built (sub-score ÷ 5 × weight):
| Dedicated page or article source · as of Jul 2026 | Profile → | ||||||||||||||||||||||||||||||||
| Cherry Bekaert Engineering-first · National (Richmond, VA; #1 Southeast) Best for national on-site coverage | 8.6How this score is built (sub-score ÷ 5 × weight):
| Dedicated page / named case study source · as of Jul 2026 | Profile → | ||||||||||||||||||||||||||||||||
| Madison SPECS Engineering-first · National (Lakewood, NJ) Best for national on-site coverage | 8.5How this score is built (sub-score ÷ 5 × weight):
| Dedicated page / named case study source · as of Jul 2026 | Profile → | ||||||||||||||||||||||||||||||||
| RE Cost Seg Engineering-first · National (Houston, TX) Best published pricing Best for virtual delivery Most transparent turnaround | 8.4How this score is built (sub-score ÷ 5 × weight):
| Dedicated page or article source · as of Jul 2026 | Profile → | ||||||||||||||||||||||||||||||||
| Engineered Tax Services (ETS) Engineering-first · National (West Palm Beach, FL) Best for national on-site coverage | 8.4How this score is built (sub-score ÷ 5 × weight):
| Dedicated page / named case study source · as of Jul 2026 | Profile → |
Top 5 of 22 firms scored for multifamily (5+). See every firm's full profile and per-type standing in the provider directory.
*Score is this site's published rubric output (0–10) for multifamily (5+), weighting relevant property-type evidence most heavily (see how we compare) — click any score for its build-up. It is not a customer rating and no reviews are used. Cost Seg Smart is the site owner and is scored on the same rubric.
6Is it worth it — break-even
Because the reclassifiable finishes and site work repeat across every unit, a modeled 12–30% reclassification of depreciable basis is typical for multifamily, and the benefit generally clears a study fee well before basis reaches the low seven figures — earlier where bonus depreciation is available.
7Frequently asked questions
Why is the baseline 27.5 years and not 39?
Residential rental buildings — those where dwelling units generate the rent — recover over 27.5 years, not the 39-year commercial life. Cost segregation still moves qualifying components into 5-, 7- and 15-year classes; only the shell that remains sits at 27.5 years.
What did AmeriSouth actually decide?
In AmeriSouth XXXII, Ltd. v. Commissioner, the Tax Court disallowed many of an apartment owner's component reclassifications, holding that items operating as part of the building's plumbing, electrical and mechanical systems are structural. It is the standard caution against over-aggressive apartment splits: removable, unit-serving property may qualify, but building systems stay in the shell.
Can we reclassify kitchen cabinets and countertops?
It depends on the facts. Cabinetry that is genuinely removable and not a permanent structural component may qualify as personal property; built-in millwork that finishes the dwelling generally remains part of the 27.5-year shell. The determination rests on permanence and function, not on the label.
How does the pool and clubhouse get treated?
The pool shell, decking and other hardscape are generally 15-year land improvements, while loose clubhouse and fitness furniture and equipment are 5-year personal property. Anything affixed as a building component follows the structure.
Does bonus depreciation change the math?
It concentrates the benefit. Property with a recovery period of 20 years or less — the 5- and 15-year items a study identifies — is what bonus depreciation accelerates, so the same reclassification produces a larger first-year deduction when bonus is in effect. The percentage that reclassifies does not change; its timing does.
Sources and authority consulted
- Rev. Proc. 87-56 MACRS asset classes, as reproduced in IRS Pub. 946 App. B (Table of Class Lives and Recovery Periods)
- IRS Cost Segregation Audit Techniques Guide (Pub 5653)
- AmeriSouth XXXII, Ltd. v. Commissioner, T.C. Memo 2012-67
- 26 U.S.C. §168(e)(2) — definitions of residential rental and nonresidential real property
- Cost Seg Smart per-vertical component engine (modeled ranges + component authorities).
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