Cost Segregation studies offer a powerful way for commercial building owners to unlock depreciation deductions, reduce their tax burdens and boost cash flow by reclassifying certain real property assets as personal property. Cost segregation is a conservative and IRS-defined approach for depreciating commercial properties.

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Calculations and Processes in a
Cost Segregation Study

2. INTRODUCTION
Cost Segregation studies offer a powerful way for
commercial building owners to unlock
depreciation deductions, reduce their tax
burdens and boost cash flow by reclassifying
certain real property assets as personal property.
Cost segregation is a conservative and
IRS-defined approach for depreciating
commercial properties.
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3. Advantages of a
Cost Segregation Study
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The main advantage of obtaining a Cost Segregation
study is that it can shorten the useful lives of assets
under accelerated depreciation methods.
A taxpayer can reduce the current federal taxable income
by taking the minimum deduction permissible under the
tax code, by implementing a cost segregation strategy.

4. The general method of depreciation would be over 39.5 years utilizing
the straight line method, when a commercial property is placed into
service. However, there are other options.
Cost Segregation Study
Processes in
Cost Segregation is a process of breaking down the individual
components of the building into four categories that includes:
Personal Property Land Improvements Building Land
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5. Cost Segregation Study
Calculations in a
A cost segregation study lowers the tax rate because
the assets can be written off at an accelerated rate
over a 5, 7, or 15 year period.
It is important, because the determination of what qualifies as tangible
personal property and what are the structural components of the building
have been challenged under audit and have led to numerous tax court
cases over the years, along with the issuance of private letter rulings.
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6. To know more, reach
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