Cost Segregation

When you purchase or construct a property, your investment includes not only the building itself but also various components that make up the property. A cost segregation study identifies and reclassifies these components into shorter depreciation schedules, allowing for accelerated tax deductions and significant financial benefits.

Without a cost segregation study, these components are often grouped together and depreciated over the standard periods of 27.5 years for residential properties or 39 years for commercial properties. By reclassifying eligible components into shorter depreciation categories, property owners can reduce their taxable income, realize substantial tax savings, and enhance cash flow.

A cost segregation study can be conducted at any time after acquiring, constructing, or renovating a property. However, certain milestones provide the best opportunities for maximizing benefits:

• After Acquiring or Repositioning a Property: Capture immediate tax savings by identifying eligible components.
• During Renovations: Ensure all qualifying improvements are properly documented and depreciated.
• Before Project Completion: Engaging early in the construction process maximizes potential benefits by aligning planning with tax strategies.