Resource Library
Tax Reform Solutions for Commercial Building Owners

Cost Segregation in Commercial Real Estate

Cost Segregation is the process of identifying assets according to their asset class lives, their associated costs, and classifying those assets for federal tax purposes. Cost segregation enables commercial real estate owners to reallocate real property to personal property. This results in a substantially shorter depreciable tax life and accelerated depreciation methods. The end result is lower income taxes of $30,000 – $100,000 per million in building cost for the building owner.

The benefits of a cost segregation study include:

  • Immediate increase in cash flow
  • Reduction in current income taxes
  • Deferral of taxes
  • Ability to reclaim “missed” depreciation deductions from prioryears without having to amend tax returns

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