Faster depreciation. Lower taxes. Better cash flow.

When you purchase or build a commercial property, the IRS typically requires you to depreciate the entire building over 39 years. But not every component of that building is a building.

Carpeting, lighting, certain plumbing, land improvements, and specialized equipment can be depreciated over 5, 7, or 15 years — or in some cases, written off immediately under bonus depreciation rules.

A cost segregation study identifies and reclassifies these components. The result is a significant acceleration of depreciation deductions — which means lower taxable income in the years you need it most.

The study is an engineering-based analysis of your property. We work with qualified engineers to produce a report the IRS accepts.

The numbers are real.

A $1 million commercial property with a cost segregation study can generate $80,000–$150,000 in additional first-year depreciation deductions depending on property type and bonus depreciation rules in effect. At a 30% effective tax rate, that's $24,000–$45,000 in tax savings — in year one alone.

What the numbers look like.

Years to depreciate a commercial building under standard rules

5–15

Years for qualifying personal property and land improvements after reclassification

20–40%

Typical percentage of a commercial building's cost that qualifies for accelerated depreciation

Year 1

When most of the benefit is realized — the study typically pays for itself in the first tax year

You may be a candidate if you own any of these.

Office buildings

Purchased, built, or renovated in the last 15–20 years.

Retail and restaurant

High personal property content — often 30–40% qualifies.

Warehouses & industrial

Land improvements and specialized systems qualify.

Rental residential (5+ units)

Apartment buildings and multi-family properties.

Medical and dental offices

High equipment and specialized build-out content.

Hotels and hospitality

Among the highest personal property percentages of any property type.

Straight answers.

Is cost segregation only for new properties?

No. You can perform a "look-back" study on properties you've owned for years and catch up on missed depreciation in a single year — without amending prior returns. This is called a Section 481(a) adjustment and is IRS-approved.

What does a study cost?

Studies typically range from $5,000 to $15,000 depending on property size and complexity. The tax savings in year one almost always exceed the cost of the study by a significant multiple.

Will this trigger an audit?

Cost segregation is a well-established, IRS-accepted methodology. Properly documented studies conducted by qualified engineers are defensible. We work with engineers who produce audit-ready reports.

What about bonus depreciation?

Bonus depreciation rules have changed significantly in recent years and continue to phase down. The interaction between bonus depreciation and cost segregation affects the timing of your benefit. We'll model the current-year impact before you commit to the study.

Do I need to do anything special with my bookkeeping?

No. The engineer handles the property analysis. We handle the tax treatment. You provide basic property information — cost, date placed in service, and construction details if available.

Own commercial real estate? You're probably overpaying taxes on it.