The IRS requires every commercial property owner to apply the Tangible Property Regulations to expenditures made after a building is placed in service. Done correctly, that mandatory review routinely uncovers deductions owners didn't know they had — and it's a required step before a cost segregation study can even be performed.
They're often mentioned together, but they solve different problems — and the order matters.
| Tangible Property Regulations | Cost Segregation | |
|---|---|---|
| Required? | Mandatory for all building owners | Optional, at any time |
| What it reviews | Expenditures made after the building was placed in service | The original purchase or construction cost basis |
| Result | A permanent deduction, not a deferral | Accelerated depreciation — a timing benefit |
| Who performs it | A CPA or tax preparer applying the IRS capitalization tests | An engineer, architect, or qualified cost estimator |
| Sequencing | Must be completed first on an existing building | Can only follow a completed TPR review |
Send over your federal tax depreciation schedule and property addresses to get started.
We determine whether a TPR study is needed and provide an expected range of deductions, plus a cost segregation pre-analysis.
An engagement letter is issued and the project is scheduled.
Appraisals, blueprints, closing documents, cost detail, depreciation schedules, and photos are gathered.
A site visit is scheduled to photograph and survey the property for accurate engineering data.
Your completed study is delivered, with the IRS Form 3115 prepared and signed by staff CPAs if requested.
Deductions realized by property owners who came into compliance.
A free analysis shows the expected deduction range before you commit to anything.
Get a Free ConsultationYes. Since the regulations were finalized in 2014, the IRS requires every building owner to apply the capitalization tests to expenditures made after the property was placed in service. Cost segregation, by contrast, is optional.
A TPR study reviews expenditures made after a building was placed in service and determines whether they should have been capitalized or expensed, producing a permanent deduction. Cost segregation reclassifies the original building cost basis into shorter depreciation schedules — an acceleration, not a permanent deduction.
No. TPR method changes are typically implemented through an IRS Form 3115 change in accounting method, applied in the current tax year, without amending prior returns.