Cost Segregation Services in New York
Cost segregation in New York has become the defining strategy for developers navigating the city’s most significant real estate transformation in decades. As office vacancies remain high and the market pivots toward residential conversions and life science hubs in Long Island City and Manhattan, a generic approach to tax planning is no longer viable. Engineered Tax Services specializes in high-yield studies designed to improve liquidity for developers and institutional investors by accelerating depreciation in this high-cost environment.
A cost segregation study is a federal income tax tool that increases your near-term cash flow by deferring taxes. With a cost segregation analysis in New York, you could be able to write off up to 30-35% of your building’s original purchase price in the first year!
Because depreciation occurs when a purchased building ages, it loses value over time. Actually, your building is not only one piece of property, but comprised of subcomponents (such as lighting fixtures, heating and air conditioning systems and other components that deteriorate over time).
But unlike the whole of a building, which is seen as having either 27.5- or 39-year lifespan, subcomponents are granted a five- or 15-year lifespan, making the depreciation deduction larger, especially in the first several years. Consequently, whether your real estate property in New York is residential or commercial, you can write off that cost either in a 27.5- or 39-year timeframe.
The New York Tax Advantage: 100% Bonus Depreciation
The most critical change for 2025 is the federal restoration of 100% bonus depreciation via the One Big Beautiful Bill Act (OBBBA).
Instant Expensing: For any New York property acquired and placed in service after January 19, 2025, you can now deduct 100% of the cost of 5, 7, and 15-year assets in the first year.
Qualified Production Property (QPP): The OBBBA introduced a new incentive for manufacturing and “production” facilities. Engineered Tax Services helps NYC businesses identify the manufacturing-use portion of their facilities to claim a temporary 100% bonus deduction on the real property itself, a game-changer for Brooklyn’s industrial zones.
Strategic Focus: NYC Office-to-Residential Conversions
With the “City of Yes” zoning reforms making conversions citywide in 2025, developers are reclaiming millions through cost segregation. When you gut-renovate a Midtown office tower into luxury apartments, Engineered Tax Services performs two critical functions:
Partial Asset Disposition (PAD): Calculate the remaining book value of the old mechanical systems, windows, and interiors you are removing. This allows you to claim an immediate loss deduction in 2025.
Accelerated New Basis: Segregate the new residential assets (luxury finishes, specialized plumbing, security systems) to take advantage of 100% bonus depreciation on the new build-out.
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Frequently Asked Questions
How Much Money Could Detailed Cost Segregation in New York Save You?
Since many components can be written off after a cost segregation study, if your purchase price was $1 million (for instance), you can deduct $300-400,000 immediately. Consequently, if you only invested $100,000 of your own money and borrowed the other $900,000, you’ve only spent $100,000, but received a $300,000 deduction!
For example, let’s assume you’re classified as a real estate professional or you have material participation in a commercial real estate investment in New York and earn a $100,000 salary. Because you can apply your $300,000 deduction to offset taxable income, you’re only paying taxes on $700,000!
Does Cost Segregation Work for the 467-m Tax Incentive in NYC?
Yes. Developers utilizing the 467-m tax incentive for office-to-residential conversions should commission a cost segregation study early. By reclassifying building components into shorter useful lives, Engineered Tax Services helps you front-load depreciation alongside your property tax exemptions to create a “zero-tax” environment for the first several years of the project.
What is the Impact of the 2025 OBBBA on New York “Used” property?
The OBBBA maintained the “original use” requirement for many assets, but it clarified that 100% bonus depreciation applies to “used” property as long as it was acquired after January 19, 2025, and meets specific IRS holding criteria. Engineered Tax Services verifies these acquisition dates to ensure your NYC acquisition qualifies for the full 100% rate.
How Does Cost Segregation Interact with NYC’s High Realty Transfer Tax?
In 2025, NYC Transfer Taxes remain some of the highest in the country. Cost segregation acts as a “liquidity recovery” tool. By reclaiming 20%–40% of your purchase price in first-year deductions, Engineered Tax Services can help you effectively recoup the cash lost to transfer taxes and closing costs within the first 12 months of ownership.
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Our Cost Segregation Specialists are happy to answer your questions about this federal income tax tool.
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Case Studies
Cost Segregation Study on a Apartment Complex in Upstate New York
$1,894,081.46 in 1st year Total Realized Tax Savings Without a Cost Segregation Study, an upstate New York $26 Million new construction apartment complex placed in …
Cost Segregation Study On a $14 Million Dollar Office Building in Rochester, NY
$4,409,456.95 in first year tax savings Purchased in 2018 for $14 million, this office building in Rochester, New York would have generated a first-year depreciation …
Cost Segregation Study For Business Center, Brentwood, NY
$1,151,083.12 in first year tax savings Had investors in this $10.3 million business center in Brentwood, New York taken the straight-line depreciation rate, the property …
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