Overview
Cost Segregation accelerates the depreciation of personal property assets built within residential rental and commercial properties. By finding and classifying assets that lose value quickly, we can assign more costs to them. This leads to big tax savings.
Cost Segregation
Optimize tax savings and improve cash flow
Our expert team specializes in identifying and reclassifying property assets to maximize depreciation deductions. We can help your business unlock valuable tax benefits and increase your bottom line.
By accelerating depreciation deductions, you can reduce your tax liability. This frees up more cash for business operations, expansion, or investment.
By correctly identifying and classifying assets, you can benefit from shorter recovery periods and higher depreciation rates. This leads to significant tax savings.
By adjusting your depreciation schedule, you can boost the return on investment for your property. This will also raise its overall value.
Our Cost Segregation services are fully compliant with IRS regulations and guidelines, ensuring that you benefit from legitimate tax strategies.
<p>By accelerating depreciation deductions, you can reduce your tax liability. This frees up more cash for business operations, expansion, or investment.</p>
<p>By correctly identifying and classifying assets, you can benefit from shorter recovery periods and higher depreciation rates. This leads to significant tax savings.</p>
<p>By adjusting your depreciation schedule, you can boost the return on investment for your property. This will also raise its overall value.</p>
<p>Our Cost Segregation services are fully compliant with IRS regulations and guidelines, ensuring that you benefit from legitimate tax strategies.</p>
Resources
Accelerate depreciation
The main goal of a cost segregation study is to find all construction costs. These costs can be depreciated over a shorter tax life. This shorter life is usually five, seven or 15 years. In contrast, the building itself has a tax life of 39 years for non-residential property.
A large part of building and property components can be reclassified in a cost segregation study. This change allows for faster depreciation instead of using traditional methods. These can include HVAC units, roofing, siding, and windows.
Cost Segregation studies also cover electrical outlets and property improvements like fencing, sidewalks, and asphalt. By identifying these for depreciation early on, a building owner can claim a deduction on them.
Cost Segregation is not limited to newly constructed or purchased property. Any taxpayer who started using residential or nonresidential real property after 1986 can have a cost segregation study done. This applies to new, built, or renovated properties. This is true as long as they did not allocate costs to personal property.
Eligible properties include buildings that have been purchased, constructed, expanded or remodeled since 1987. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $200,000.
A Cost Segregation study works best for new buildings. However, it can also find tax deductions for older buildings. This can lead to big short-term benefits from “catch-up” depreciation.
Property Type |
Reclassification |
| Hotels | 30% – 50% |
| Shopping Malls | 22% – 40% |
| Office Buildings | 15% – 30% |
| Apartment Buildings | 20% – 45% |
| Banks | 30% – 47% |
| Retail Facilities | 18% – 35% |
| Manufacturing | 30% – 45% |
A professional Cost Segregation study looks closely at all records related to the building’s construction. This includes inspection records, blueprints, permits, material invoices, and physical inspection reports.
Onsite analysis gives a lot of important information. It can help estimate the value of building parts when detailed records are missing.
The best time for a Cost Segregation study is within the year a building is finished, purchased, or improved. However, these studies can (and often should) be done on newly purchased buildings that have stood for longer periods of time.
If the building was bought, built, or renovated in the last 15 years for more than $200k, a Cost Segregation study can help. This study benefits the building owners by speeding up the depreciation of replaceable parts. It allows these parts to be written off when they are eventually replaced.
How we can help
Our services
Our goal is to deliver maximum tax savings while ensuring compliance and minimizing any potential audit risk.
Conduct a Cost Segregation Study
Engage a qualified tax consulting professional or engineering firm to perform a study identifying eligible assets.
Simplify Tax Strategies
Adding Cost Segregation to your tax plan needs knowledge of tax law. This helps you stay compliant and save more money.
Documentation
Cost Segregation deductions require proper documentation, including energy modeling and engineering certifications.
Insights
Our latest thinking
The latest insights and solutions helping to transform your tax savings.
