Real Estate Tax Strategy
Accelerate Depreciation. Improve Tax Efficiency.
A cost segregation study analyzes components of a qualifying property to determine whether certain assets may be depreciated over shorter recovery periods rather than solely using the standard building depreciation schedule.
What Is Cost Segregation?
When you acquire or construct a building, the IRS generally requires the entire structure to be depreciated over 27.5 years (residential) or 39 years (commercial). However, many components within a building — such as certain fixtures, flooring, electrical systems, and land improvements — may qualify for shorter depreciation periods of 5, 7, or 15 years.
A cost segregation study identifies and reclassifies these components, which can accelerate depreciation deductions and create larger deductions earlier in the ownership period.
When combined with bonus depreciation provisions, cost segregation can be a significant tax planning tool for qualifying real estate owners.
Who May Benefit
- Rental property owners
- Commercial property owners
- Short-term rental investors
- Real estate professionals
- Investors acquiring or renovating buildings
- Owners with significant taxable income
How It Works
Review property information
We begin by reviewing the property details, acquisition cost, and relevant financial information.
Determine preliminary eligibility
We assess whether the property and ownership situation may benefit from a cost segregation analysis.
Analyze depreciable basis
We review the depreciable basis of the property and identify components subject to analysis.
Perform cost segregation analysis
We conduct a detailed analysis of property components to identify assets that may qualify for shorter depreciation periods.
Categorize qualifying property components
We categorize components into appropriate asset classes based on applicable tax rules.
Coordinate tax implementation
We work with you to implement the results of the study in your tax filing appropriately.
Request a Cost Segregation Review
Schedule a call to discuss your property and determine whether a cost segregation analysis may be appropriate for your situation.
Request a Cost Segregation Review