Cost Segregation Studies - 179D Studies - R&D Credits

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OnPoint + CSSI®: Engineering-Backed Tax Savings for Property Owners

OnPoint works closely with CSSI® (Cost Segregation Services, Inc.) to deliver powerful tax strategies built on engineering precision. From real estate investors to developers, we help clients identify, document, and capture tax savings through proven federal incentives.

We specialize in engineering-based cost segregation studies, Section 179D energy deductions, and R&D tax credits because these programs offer substantial tax savings when executed with technical accuracy. Each strategy requires detailed engineering analysis to identify and support eligible assets or activities—ensuring full IRS compliance and maximum financial benefit.

These incentives apply not only to newly constructed properties, but also to those that are recently purchased, already owned, renovated, or expanded. OnPoint helps clients evaluate these opportunities and connects them with trusted experts to conduct audit-ready studies that unlock accelerated depreciation, energy-efficiency deductions, and innovation-based tax credits.

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Cost Segregation Studies

Cost segregation is a powerful strategy that reclassifies building components from long-term (39- or 27.5-year) depreciation into shorter 5-, 7-, or 15-year categories. This accelerates depreciation, improves cash flow, and lowers near-term tax liability. CSSI® provides fully engineered studies that identify eligible assets such as interior finishes, electrical, mechanical, and exterior improvements—delivering detailed documentation that withstands IRS scrutiny.

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Cost segregation is an IRS-accepted tax strategy that enables commercial property owners to accelerate depreciation deductions by segregating the cost of a building into various asset classes. Instead of depreciating the entire building over 39 years (or 27.5 years for residential rental property), a cost segregation study allows components that qualify as personal property or land improvements to be depreciated over 5, 7, or 15 years.

Eligible reclassified items often include:

Carpet, decorative lighting, cabinetry, and specialty finishes
Dedicated electrical and plumbing for specific equipment
Millwork, moveable partitions, and accent walls
Exterior features like paving, curbs, sidewalks, fencing, and landscaping

These assets qualify for shorter depreciation schedules and may also be eligible for bonus depreciation—allowing up to 100% of their cost to be written off immediately (depending on the federal rate in the year placed in service).

CSSI® uses engineering-based documentation to ensure full IRS compliance. Their reports include site inspections, categorized asset breakdowns, photographic records, and a full audit trail. Studies are applicable to newly constructed, purchased, or renovated buildings within the last 15 years.

Most clients recoup 20–40% of building costs into shorter-life property classifications, generating substantial year-one tax savings. A no-cost benefit analysis can estimate projected savings in advance of any engagement.

179D Energy-Efficient Commercial Building Deduction

The 179D deduction offers significant tax savings for qualifying energy-efficient improvements to commercial buildings. CSSI® provides certified 179D studies that analyze HVAC, lighting, and building envelope systems for eligibility—allowing building owners, designers, and government contractors to claim up to $5.00 per square foot in federal deductions. This incentive is especially valuable for new construction and major renovations that meet specific ASHRAE and prevailing wage standards.

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Section 179D of the Internal Revenue Code allows for an immediate deduction of up to $5.00 per square foot for energy-efficient design elements. Projects must demonstrate a 25% or more reduction in energy usage relative to the ASHRAE 90.1 standard to qualify. Qualifying systems include:

High-efficiency HVAC systems
LED and sensor-controlled lighting
Insulated windows, roofing, and exterior materials

The deduction can be claimed by:

Commercial property owners
Designers (architects, engineers, contractors) of government buildings
ESG-focused firms aiming to improve sustainability ratings

CSSI® uses DOE-approved software and licensed Professional Engineers (PEs) to certify energy models. Their reports include prevailing wage compliance verification, project-specific calculations, and allocations when multiple parties are involved.

The 179D deduction is often retroactively available for improvements made in the past 3 years—enabling clients to amend returns and recover missed deductions.

R&D Tax Credits

The federal Research & Development (R&D) Tax Credit rewards companies that innovate—whether through new product development, process improvements, software design, or technical problem-solving. CSSI® helps clients in engineering, manufacturing, technology, architecture, and construction industries identify and document eligible activities. Qualifying expenses include wages, materials, prototypes, and subcontracted research, offering both income tax and payroll tax savings.

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R&D tax credits apply to a wide range of industries and activities—not just traditional laboratories. If your company develops new or improved products, processes, or technologies, you may qualify. Common examples include:

Prototyping and product testing
Custom software development
Manufacturing process improvement
Automation and system optimization

Qualifying expenses include:

W-2 wages for technical employees
Material costs for prototypes
Cloud and software expenses
Third-party contractor fees (when under U.S. control)

Startups can apply the credit against payroll taxes (up to $500,000 per year). Established firms apply it against federal income taxes. Unused credits may be carried forward for up to 20 years.

CSSI® provides comprehensive R&D studies with full technical narratives, documentation of qualifying projects, and audit-ready backup. The process includes interviews, time tracking validation, and allocation of expenses to eligible activities.