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A Cost Segregation Study is a tax savings tool that allows previously classified assets subject to 39-year depreciable life for a commercial building and 27.5-year for a residential building to reduce current income tax liabilities by accelerating depreciation deductions for qualifying components. The study identifies assets within a building that can be reclassified into a much shorter depreciation recovery period.

“Cost Segregation is a lucrative tax strategy that should be used in almost every major purchase of commercial real estate” – The Wall Street Journal

Benefits of a Cost Segregation Study

  • Generates immediate increase in cash flow through accelerated depreciation deductions
  • Reduces income taxes and can also reduce real estate property taxes.
  • Provides an easy opportunity to claim ‘catch up’ depreciation on previously misclassified assets.
  • Provides an independent third-party analysis that will withstand IRS review
  • Property owners with a current year tax liability
  • New construction
  • Purchase of existing property
  • Renovations or expansion
  • Leasehold improvements
  • Existing property placed in service after 1986 (“look-backs”)
  • Real property stepped-up through estate
  • Over $500,000