Why Hasn't Anyone on My Team Brought Up Cost Segregation?

TL;DR: If nobody on your team has ever brought up cost segregation, it almost certainly wasn't a decision. It was an oversight. Every advisor around you has a lane: your tax professional prepares the return from what's in front of them, your wealth manager watches the investments, your attorney watches the structure, your property manager watches the tenants. A cost segregation study is engineering work on the building itself, and it sits in the gap between those lanes. The bigger the team, the easier it is for each person to assume somebody else has it covered. The fix is one question, and you're the person who has to ask it.

Is a missed cost segregation study usually a decision?

Almost never. It's usually a question nobody asked.

Picture two owners under the same tax code. The first bought a short-term rental last spring. It's her first property. She heard about cost segregation on a podcast, made a call, a trained professional walked the property, and the deduction showed up on her first return.

The second owns a portfolio: industrial, multifamily, a couple of office buildings. There's a family behind it and a full team around that family. A tax professional, a wealth manager, an attorney, someone running the investments full time. Nobody on that team has ever run a study on a single one of those buildings. Not because they looked at it and said no. Because it never came up.

I put that exact question to DJ Van Keuren on Episode 31: when a family doesn't run a study, is that usually a decision somebody made, or did nobody put it in front of them? His answer was immediate. The latter. In our rapid-fire round I asked again, one word only, decision or oversight. "Oversight."

That matches what I see from the stage. A few years ago I spoke at WealthCon to a room of about 350 seasoned investors and asked how many were familiar with cost segregation. Fewer than two dozen hands went up. When I asked how many had actually done a study, six hands went up, and all six were my clients. These weren't beginners. They just hadn't heard it from anyone.

Why doesn't a bigger advisory team mean it comes up?

Because a bigger team is a set of specialists, and this question doesn't belong to any one of them by default.

DJ described what happens when someone comes into serious money. You'd expect them to go find the best real estate tax specialist available. What they actually do is call whoever they trust. That might be their tax professional. It might just as easily be their attorney, their financial planner, or a neighbor who ran a successful business. Trust is a good reason to hire someone. It isn't the same thing as expertise in a particular asset class, and someone who spent forty years in chemicals or tires doesn't automatically know how real estate depreciation works.

Then there's the mandate. DJ said every family he worked for gave him the same three instructions: don't lose money, don't lose money, don't lose money. When the whole team is pointed at preservation, tax planning tends to show up later in the process than it should.

Your tax professional deserves a fair hearing here. They prepare the return from what they're given: the closing statement, the depreciation schedule, the entity documents. Run a building on the default schedule and the return is correct. It's just the slowest correct answer available. A study requires someone to commission engineering work on the physical building, which is a decision that happens upstream of the return. If no one asks for it, no one is doing anything wrong, and the deduction still sits there unclaimed.

DJ also offered a data point that shows how wide the awareness gap runs. By his account, the annual family office real estate study his institute conducts has consistently found that about 80 percent of families don't do 1031 exchanges. These are smart, well-advised people. The issue isn't intelligence or money. It's that a strategy has to reach the decision maker before anyone can act on it.

Which owners have someone watching for cost segregation?

It depends on how the real estate is held. DJ breaks family office real estate investors into five types, and the gap lives in specific places.

Families who made their money in real estate. It's their business every day. They'll know.

Very large families that hire institutional talent. They tend to build a real estate department staffed by people from large institutional firms. Someone there is usually watching.

Families that build their own portfolio. They buy properties directly and hire a property manager or asset manager, with an internal investment lead who often came over from the family's operating business. This is where it gets missed most, in DJ's view, purely from a knowledge and awareness gap.

Families that allocate to sponsors. Joint ventures, direct deals, money placed with operators. Typically the operator handles cost segregation. Typically.

Families that invest through funds. Little or no internal infrastructure. But many of them still own real estate directly on the side, and nobody may be watching those buildings at all.

Most readers of this blog aren't family offices. The pattern still applies to you. If you own a few rentals, or the building your business operates out of, ask yourself who on your team owns this question. If you can't name the person, that's your answer.

What if you invest through a syndication or private placement?

Then the question goes to the operator, and you have to ask it directly.

DJ added this one himself near the end of the episode. If you've put money into a direct deal, a private placement, or a special purpose vehicle, find out whether the operator ran a cost segregation study, and whether you're actually benefiting from it. In his experience, that happens less often than investors assume.

Whether the deduction reaches you depends on how the partnership allocates tax items, which is spelled out in the operating agreement. Read the tax allocation section, and if it isn't clear, ask your tax professional to read it with you. We covered who gets the cost segregation deduction in a partnership in detail.

What question should you ask, and what should you bring?

Ask your tax professional one question this week: "Has anyone ever run a cost segregation study on a property I own?"

Not "should we." "Has anyone ever." The first version invites a conversation about whether it might make sense someday. The second gets you a fact. And if the honest answer is "I don't know," put that down as a no.

Before that conversation, pull three things for every property you've held more than a year:

• The purchase date.
• The placed in service date, meaning the day the property was ready and available for a tenant or for your business to use. It's often different from the closing date, and it's the one that starts depreciation. Here's how that date gets set.
• The purchase price.

That's enough to start. You don't need to assemble a file before anyone will talk to you.

If a study does get proposed, ask one more thing: does the provider perform an in-person site visit by a trained professional? If the answer is anything other than yes, keep looking. Desktop estimates and rule-of-thumb percentages aren't the same product, and engineering-based cost segregation is the only kind worth paying for.

What if you bought the building years ago?

You haven't missed your chance. This is one of the most common reasons owners never ask, and it's based on a wrong assumption.

Depreciation you were entitled to but never claimed can generally be picked up in the current year through an accounting method change filed on Form 3115, rather than by amending prior returns. We walked through how the Form 3115 catch-up works, and it applies directly to a look-back study on a building you've owned for years.

The timing on newer purchases matters too. IRS Publication 946 (2025) states that P.L. 119-21, the One Big Beautiful Bill Act, "reinstated the 100% special depreciation allowance" for certain qualified property acquired and placed in service after January 19, 2025. The short-life components a study identifies, generally 5, 7, and 15-year property, are the pieces that allowance can reach.

When is the honest answer no?

Sometimes, and it's worth knowing before you ask.

The clearest case is a short hold. If you plan to sell soon without a 1031 exchange, accelerating depreciation mostly sets up recapture on the way out. Here's what happens when you sell after a study.

The second is an investor who can't use the losses yet. If the deductions would be passive and you don't have passive income to offset, a large first-year deduction may just sit there. It isn't lost, but on smaller properties it can mean speeding something up only to slow it back down. That's a judgment call on your specific facts, and it belongs with your tax professional.

What isn't a reason anymore: "my property is too small" or "my building is too old." Those were rules of thumb from years ago, and plenty of owners still believe them. The right test is a look at your actual property and your actual tax picture, and here's how to tell whether a study will pay for itself.

None of this is a loophole or a gray area. The short recovery periods for components like carpet, specialty electrical, paving, and site lighting are written into the tax code on purpose. Using them is just reading the rules all the way through.

Where to go from here

If you can't say for certain whether a study has ever been run on a building you own, find out. Start with the question to your tax professional. Then, if you want a second set of eyes on the numbers, I can help.

Want to know whether a study would even pay for itself on your property? That's what the no-cost analysis is for. It's delivered through my relationship with CSSI (Cost Segregation Services, Inc.). No obligation and no pitch, and if the numbers say a study won't pay for itself, I'll tell you. You don't need to gather anything first. Bring the address and the rough facts.

• Book a time: https://calendly.com/david-wiener/cs
• Or call 770-224-8504, option two.

For the full conversation with DJ, including how tax benefits belong in the underwriting model, listen to Episode 31.

This article is educational and is not tax advice. Depreciation rules turn on facts specific to your property, your entity, and your return, and tax law changes. Talk to your own CPA or tax professional before acting on anything here.