Multifamily Cost Segregation for 20–100 Units: Buildings, Partners and Basis
By AE Tax Advisors · Published 2026-08-09 · Updated November 8, 2026.
A multifamily study covering several buildings needs a consistent reconciliation of costs, assets and tax ownership. A project-level deduction is not automatically the current deduction available to every partner.
Create a building and shared-cost map
Identify each building, acquisition basis, service date and improvement phase. Allocate shared infrastructure using a supported method and reconcile totals to the closing statement and ledger. Avoid duplicating a shared amenity or utility cost across buildings.
Classify amenities and central systems
Review pools, clubhouses, fitness rooms, leasing offices and laundry assets individually. General building systems and equipment-serving installations may differ. A pool or parking structure does not acquire a single recovery period solely from its label.
Connect the study to partnership reporting
Review the partnership agreement, capital accounts, tax basis and applicable allocation rules with the preparer. A larger depreciation amount can affect several schedules. The engineering report does not determine whether a special allocation is valid.
Evaluate every investor's loss limits
Outside basis, at-risk amounts, passive status and other restrictions can differ among partners. Sponsor participation does not automatically make a limited investor's loss nonpassive. Present estimated project deductions separately from estimated investor tax benefits.
Keep the future sale in the model
Component depreciation can affect recapture. Section 1031 does not automatically defer gain on every asset classified as personal property. If the project is an existing holding, determine the proper correction procedure before promising a catch-up deduction.
Book a Cost Seg Discovery Call with building schedules, partner reporting information and planned improvements.
Frequently Asked Questions
Does the sponsor’s participation determine every partner’s treatment?
No. Each investor’s applicable limitations require review.
Does a 1031 exchange automatically defer all component recapture?
No. Review whether the assets qualify as real property and the other exchange requirements.
Sources and review notes
Reviewed November 8, 2026 by AE Tax Advisors. Examples are illustrative; apply the rules to the relevant tax year and records. See our editorial policy.