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A restaurant cost segregation study sorts your build-out by tax life. The kitchen systems, dedicated utilities, finishes, and site work move off the 39-year schedule and onto 5, 7, and 15-year lives — so you recover that cost in years instead of decades.
Restaurants are asset-dense — more of the building reclassifies than a plain office or retail box. With 100% bonus depreciation, most is deductible the year you place it in service.
The One Big Beautiful Bill made 100% bonus depreciation permanent for property acquired and placed in service after January 19, 2025 (per IRS guidance in Notice 2026-11). Most of what the study pulls out is deductible the year you place it in service — not over 39 years.
Restaurants are the vertical where cost seg pays hardest. The kitchen, the build-out, the site work — all of it is a bigger share of your total build than in almost any other property type. The study identifies each component and ties it to authority so it holds up under review.
Three categories of reclassifiable cost — plus the equipment-vs-building line that decides each item.
Cooking equipment, walk-in coolers and freezers, exhaust hoods, grease traps, the fire-suppression system over the cook line, and the electrical and plumbing run specifically to them. Equipment, not building.
Decorative lighting, millwork, wall and floor finishes installed for appearance, signage, and point-of-sale wiring. Finishes there for the look of the room — not to hold the building up — generally carry a short life.
Parking, curbs, exterior lighting, fencing, and landscaping. Classic 15-year property under <a href="https://www.irs.gov/publications/p946" target="_blank" rel="noopener nofollow">IRS Publication 946</a>. Often overlooked when a study focuses only on the interior.
A kitchen exhaust hood serving the fryers is equipment (short life). The HVAC conditioning the dining room is building (39-year). A defensible study documents each call and ties it to the authority behind it.
We work from your build-out costs, contractor invoices, and fixed-asset list. Engineering-based estimates fill any gap so the numbers are supportable, not guessed.
Every asset goes on its correct life and is tied to the source that supports it. Kitchen exhaust hood, walk-in condenser, dining room finish — each classification has a paper trail.
Applied on the current return for a property you just placed in service, or through a change in accounting method (Form 3115) for one you have held a while. We can also file it and model the deduction against your actual return in one place.
Why Restaurant Owners Trust Dimov Tax
Dimov Tax does the study AND the tax work. A standalone engineering report skips the modeling against your real picture — active vs passive loss, recapture if you sell — so the deduction can sit idle. That doesn't happen with us.
The fee tracks the building: its size, its build-out cost, how detailed your records are, and whether the study is current-year or a look-back. We quote after a short look, so the fee fits the job — and it runs a fraction of the first-year deduction it frees up.
A remodel is a reason to look again. New assets from a refresh or franchise-required update install new short-life property. And the fixtures and finishes you tear out can often be written off at retirement. A restaurant that has renovated since its last study may be leaving both unclaimed.
Aggressive classifications get adjusted back with interest and penalties. Pushing the dining room HVAC onto a 5-year life because the kitchen hood qualifies is exactly the call that draws an adjustment. A defensible study documents each classification against the IRS framework.
The other traps: passive losses with nowhere to go (no active income or real estate professional status to absorb them), no plan for recapture if a sale is near, and states like California that don't conform to bonus depreciation — so the state result is smaller and spread over a longer schedule.
Sources: IRS Publications 544 and 946; IRS Notice 2026-11; Form 3115 Instructions
A good fit if you:
Want the fee-and-payoff framework first? See how much does a cost segregation study cost. Another asset-dense vertical: self-storage cost segregation.
Send us the building, the build-out cost, and the date it went into service. We will tell you whether there is real deduction to pull forward.
"People that own real estate… absolutely take a look at cost segregations. This can save tens of thousands of dollars, in some cases even hundreds of thousands of dollars."
— George Dimov, CPA, Founder of Dimov Tax
Feasibility read before you spend a dollar. If there isn't enough to pursue, we tell you straight.
