Cost Segregation Firm Pricing Tiers Compared

When an investor asks me why one firm quoted $8,000 and another quoted $1,500 for the same property, they are usually expecting me to say one of them is a ripoff. That is not the answer. The two quotes describe genuinely different products, built by different kinds of people, carrying different amounts of documentation. Sometimes the expensive one is worth every dollar. Sometimes it is the same deliverable with more overhead attached. This page is the tier-by-tier breakdown so you can tell which situation you are in.

The Five Tiers at a Glance

Notice that the "licensed engineer signs" column does not track the price column. That is the single most useful observation on this page. The cheapest tier and one of the mid tiers both skip the engineer, while a tier costing a fifth of the top tier keeps one.

Tier 1: Big National Engineering Firms

KBKG, CSSI, Engineered Tax Services, and Capstan are the names most CPAs recommend by reflex. They employ staff engineers, they have been doing this since before the 1997 Hospital Corporation of America decision made the modern approach viable, and they will defend a study through examination with their own people. Typical fees land in the $5,000 to $15,000 range, with institutional assets going higher.

Pricing is almost always quote-gated behind a free preliminary benefit analysis, which is itself a tell about the model: the firm wants to know what you stand to save before it tells you what it will charge. That is also why this row carries a range rather than a citation to a rate card, because the rate cards are not public. Engineered Tax Services publishes its study process, though not its fees.

One caution on research you will find while shopping. There is a widely-linked "best cost segregation companies" comparison site whose own ownership disclosure states that it is operated by Cost Seg Smart LLC, one of the providers it ranks, and that it "is not an independent publisher ranking." That does not make its numbers wrong, and I credit it for disclosing plainly. It does mean you should read it, and this page, as vendor material rather than neutral research.

Tier 2: Regional and Boutique Engineering Firms

A large middle of the market: smaller engineering shops, often regionally concentrated, sometimes specialized by asset class. Fees commonly run $3,000 to $11,000. Quality in this tier is the widest of any, because it spans genuine specialists and firms doing cost seg as a sideline. Some publish a starting rate, most quote per property.

This is also where the "virtual survey" approach shows up. Rather than sending an engineer to the property, the firm works from assessor data, construction cost databases, floor plans, and a structured photo set the owner supplies. It is the same methodology shift that lets our tier price lower, arriving from the opposite direction.

Tier 3: The CPA Desk Study

Your accountant offers to "handle the cost seg" in-house for $1,500 to $4,000. No engineer, no site visit, no component takeoff. The allocation comes from software templates or industry average percentages applied to your purchase price. This is the tier I worry about most, precisely because it does not look cheap. It costs real money, it arrives from someone you already trust, and the deliverable looks like a report.

Here is the problem in the IRS's own framework. Chapter 4 of the Cost Segregation Audit Technique Guide (Publication 5653, rev. February 2025) lists 13 principal elements of a quality study. The first is Preparation by an Individual with Expertise and Experience, and the guide notes that while there are no prescribed qualifications for preparers, a study by a construction engineer is generally more reliable than one by someone with no engineering or construction background. Several other elements, including a detailed description of the methodology, determination of unit costs and engineering take-off, and reconciliation of allocated costs to actual costs, describe work a template allocation simply does not perform. Under IRC Section 6662, the accuracy-related penalty adds 20% to any underpayment that results.

To be fair to the CPAs: many of them offer this because clients ask for a cheap option and they would rather keep the work in-house than send it out. The intent is usually good. The filing position is still weak.

Tier 4: Technology-Enabled Engineering Platforms

This is our tier, so read this section with appropriate suspicion and check the claims.

The model automates the parts of a study that are data collection rather than judgment: pulling assessor records, resolving building dimensions, matching components against construction cost data, generating the depreciation schedule. A licensed engineer still performs the classification analysis, which is the part an examiner actually reviews, and signs the report. The fee falls because the overhead and the travel fall, not because the engineering is skipped.

What I will not claim is that automation makes the classification work faster. It does not. Deciding whether a given electrical run serves the building or serves a specific piece of equipment is judgment, it takes an engineer, and it takes the same amount of time as it always did. Automation removes the hours around that decision, not the decision.

Our published fees, set by the engineering work required rather than by what your property is worth:

There is no tier below $1,200, because there is no version of this where we skip the engineer.

Tier 5: DIY and Self-Serve Software

Real published prices, and to their credit this is the most transparent tier in the industry. DIY Cost Seg lists $495 to $995 for residential buildings up to four units and $1,295 to $2,495 for commercial buildings and residential properties with five or more units, with corrections at $49 and optional audit assistance sold separately. Cost Seg Smart publishes a full rate card too, starting at $495 with most residential studies between $495 and $995 and commercial starting at $1,995.

You enter the data, the software applies its model, you get a report. No engineer reviews it and no one signs it. The taxpayer owns the inputs and the filing position entirely.

The Questions That Sort the Tiers Faster Than Price Does

1. Who signs the study, and what is their license or certification number? A name and a number, or the answer is no.
2. How is your fee determined? If the answer is a share of my tax savings or a percentage of my purchase price, the fee is tracking my benefit rather than their work. That is legal and common. It is still worth knowing.
3. Does the report explain the methodology and cite the cost sources? Publication 5653 expects this. A report that just presents allocation percentages is not showing its work.
4. Is audit defense included, or sold separately? Both are legitimate. Surprises are not.
5. What is the reclassification percentage you expect, and how does it compare to benchmarks? A provider promising 45% on a standard apartment building is telling you something about their risk appetite.

One Fee Structure the IRS Singles Out

Value-based pricing is legal, mainstream, and used by respectable firms. Contingency pricing, where the fee is a percentage of the tax savings actually realized, is different, and it is the one structure the IRS names.

Chapter 5 of Publication 5653 instructs examiners to determine the nature of the fee arrangement, observes that contingency fee arrangements "create the incentive to maximize the amount of costs attributed to Section 1245 property, usually through aggressive legal interpretations and/or by inappropriate cost or estimation techniques," and directs that examiners "should closely scrutinize studies performed on contingency fees," with a pointer to Circular 230.

That is scrutiny, not prohibition. A contingency-fee study is not illegal and the firms offering it are not criminals. But you are choosing a structure the examiner is told to look at harder, in exchange for paying nothing upfront, and that is a trade worth making consciously.

When No Tier Is the Right Answer

The honest version of this page has to include the cases where you should not buy a study from anyone, us included.

• Depreciable basis under roughly $150,000. The accelerated deduction is often too small to clear even a $1,200 fee, let alone the time.
• No income to offset. If your rental losses are passive and you have no passive income and do not qualify as a real estate professional under IRC Section 469, the deduction may sit suspended for years instead of reducing this year's bill. This is the most common reason a technically correct study disappoints its owner.
• A sale inside one to two years. Depreciation recapture on disposition claws back much of the timing benefit, and Section 1245 recapture is taxed as ordinary income.
• A low marginal rate. Accelerating deductions is worth less in a 12% or 22% bracket, and can be worth negative amounts if it pushes income into a later, higher-rate year.
• A property you are about to gut. Wait until the renovation is done, then study the finished asset, rather than paying to classify components you are about to demolish. Partial asset disposition may apply, which is a different conversation.

Cost segregation accelerates deductions you were already entitled to. It does not create them. Any provider who describes it as free money is telling you something about the provider. My colleague's fuller treatment of this is in when I tell owners not to do cost segregation.

Where to Go From Here

If you want the mechanism behind why these tiers price so differently, read how cost segregation pricing really works. If you want the fee for your specific asset class, see cost by property type. If you have a quote in hand and want to sanity check it against what the market charges at that property value, see cost by property value. For the investor's view of whether the fee is worth the deduction it unlocks, Overline covers the ROI side of the study fee decision.