Services
Cost Segregation Studies
What is a Cost Segregation Study?
A cost segregation study is a comprehensive analysis that carefully breaks down construction and/or acquisition costs of a new or existing building and allocates them to specific categories - maximizing accelerated depreciation for qualifying building components.
The current depreciable life of real estate is 39 years for commercial facilities and 27 1/2 years for rental facilities. Cost segregation studies allow taxpayers to separate different components of the total construction cost or purchase price and utilize much shorter depreciable lives for some of the following elements.
- Land improvements - 15 years
- Furniture and fixtures - 5 or 7 years
- Machinery and equipment - 5 or 7 years
The cost segregation study identifies and substantiates the specific components that are eligible for this accelerated depreciation.
- Retail
- Department Stores
- Shopping Malls
- Distribution Centers
- Manufacturing
- Restaurants
- Fast Food
- Dining
- Apartment Complexes
- Grocery Stores
- Banks
- Hotels/Motels
- Golf Courses & Ranges
- Resorts
- Industrial Buildings
- Warehouses
- Airports
- Healthcare Facilities
- Public Utilities
- Post Offices
- Automobile Dealerships
- Automobile Service Centers
- Day Care Centers
- Fitness Centers
- Marinas
- Nursing Homes/Assisted Living
- Office Complexes
- And More
Typical percentages of accelerated property by various property types are listed below:
- Manufacturing 35%-45%
- Hotels 30%-40%
- Apartments 30%-40%
- Office Complexes 15%-20%
- Tenant Improvements 25%-50%
- Retail 30%-40%
- Automobile Dealerships 25%-50%
- Grocery Stores 35%-45%
- Hospitals 20%-30%
- Warehouses 15%-20%
- Banks 25%-35%
- Nursing Homes/Assisted Living 20%-30%
Answer the following questions "True" or "False" to see whether you can benefit from a cost segregation study.
- I own property that was purchased or constructed within the past 5 or 7 years.
True / False - This property is classified as a commercial manufacturing, warehouse, retail, office facility, medical clinic or an apartment building.
True / False - The construction cost or purchase price was at least $1 million.
True / False - I plan to hold the property for at least 2 more years.
True / False - I have not performed a cost segregation study on this property in the past.
True / False
If you answered "True" to all five questions, contact us for a consultation. You may be able to save anywhere from $30,000 to over $300,000 in federal taxes as a result of a cost segregation study.