What is Cost Segregation?

Cost Segregation is a strategic tax planning tool allowing commercial or residential business owners who have purchased, built, expanded, or renovated their properties to accelerate depreciation deductions and increase cash flow as a result.

Benefit Analysis for Cost Segregation

What Does a Cost Segregation Study Look for?

When a property is purchased, it includes the building structure and the improvements on the land. Most often, 18% to 50% of those components fall into tax categories that have smaller tax lives than the building structure and can accordingly be depreciated more quickly. A Cost Segregation study analyzes the property based on its historical costs that typically would be depreciated over 27 ½ or 39 years. The purpose of a Cost Segregation study is to identify properties that can be depreciated over 5, 7, and 15 years. For example, electrical and plumbing connections supporting equipment like appliances, office equipment, or manufacturing equipment should be depreciated over 5 years.

What Other Business Uses Can a Cost Segregation Study Analyze and Provide?

  • New Construction
  • Acquired Property
  • Owner/Landlord
  • Tenant Improvement
  • Repair Regulation Compliance Studies
  • Fixed Asset Record Maintenance Studies
  • Insurable Replacement Cost New Studies
  • Interior Improvement Studies
  • Site / Exterior Improvement Studies
  • Real Property Retirement Studies

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Benefit Analysis for Cost Segregation

What Property Types Can a Cost Segregation Study be Applied to?

  • Apartment
  • Assisted Living
  • Auto Dealership
  • Bank, Branch Office
  • Cannabis Grow Facility
  • Car & Truck Repair
  • Casino
  • Cold Storage
  • Distribution Center
  • Food Processing Facility
  • Gas Station with Convenience Store
  • Golf Course & Country Club
  • Hospital or Medical Center
  • Hotel
  • Indoor Growing Facility
  • Manufacturing, Heavy
  • Manufacturing, Light
  • Office, General
  • Office, Medical
  • R&D Facility
  • Restaurant, Fast Food
  • Restaurant, Fine Dining
  • Retail, General
  • Retail, Shopping Center
  • Self Storage Facility
  • SupermarketTheater
  • Veterinary Facility
  • Warehouse or Industrial Property

Do You Have a Question?

Appraisals and Valuations may seem intimidating, feel free to reach out to us so we can help.