Cost Segregation
Accelerate Depreciation. Generate Cash Flow.
An IRS-approved strategy that reclassifies commercial property components to shorter depreciation schedules — creating significant near-term tax deductions for property owners.
Property owners
Who it helps
39 years
Standard schedule
5–15 years
Accelerated to
Approved
IRS status
What it is
What Is Cost Segregation?
When you purchase or construct a commercial building, the IRS typically requires you to depreciate the entire property over 39 years (27.5 years for residential rental). Cost segregation is an engineering-based tax study that identifies building components — electrical systems, plumbing, flooring, landscaping, parking lots and more — that qualify for shorter depreciation lives of 5, 7 or 15 years.
Who It Helps
Cost segregation is most beneficial when a property has a higher value and the owner has taxable income to offset.
- Commercial property owners who purchased, constructed or renovated a building
- Owners of office buildings, retail centers, warehouses, hotels, apartment complexes and mixed-use properties
- Investors who acquired property in prior years — studies can often be applied retroactively
- Developers completing new construction or significant renovations
Potential benefits
Potential Benefits
The specific outcome of any study depends on the property type, value, use and the owner's tax situation.
Accelerated deductions
Moving components from a 39-year schedule to 5, 7 or 15 years front-loads your depreciation deductions into earlier tax years.
Improved near-term cash flow
Larger deductions in earlier years reduce current-year tax liability, freeing up capital for reinvestment.
Retroactive application
Studies can often be applied to properties purchased in prior years through a change in accounting method — without amending prior returns.
Bonus depreciation eligibility
Shorter-life components identified in a cost segregation study may also qualify for bonus depreciation.
IRS-compliant documentation
All studies follow IRS guidelines and produce audit-ready documentation, including engineering reports and asset schedules.
Applicable to renovations
Significant tenant improvements, building renovations and additions can also be analyzed for reclassification opportunities.
Prepared for review
What We Review and Prepare
A cost segregation engagement is grounded in the property records and support needed to classify components and coordinate the resulting schedules with your tax advisor.
Property records
Available purchase, construction, renovation and asset information helps establish the scope of the review.
Supporting cost detail
Construction documents, invoices and cost records can help identify components with different recovery periods.
Classification schedules
The study organizes identified components into depreciation categories for review with your tax professional.
CPA coordination
We work alongside your CPA or tax advisor so the study findings can be evaluated in the context of your return.
How it works
How the Process Works
Feasibility review
We review your property details to determine whether a study is likely to produce a meaningful benefit.
Engineering analysis
Our team reviews construction documents, cost records and property data to identify and classify components.
Report preparation
We prepare a detailed, IRS-compliant report with component schedules, supporting documentation and depreciation adjustments.
CPA coordination
We work directly with your CPA or tax advisor to implement the study findings on your tax return.
Common questions
Frequently Asked Questions
Find Out If Your Property Qualifies
We start with a free feasibility review — no obligation, no pressure. If a study makes sense for your situation, we'll tell you.
Schedule a Free Consultation