Skip to content

A Comprehensive Guide to Cost Segregation

Investing in commercial and residential real estate offers you an opportunity to grow your portfolio, but did you know there are solutions to minimize your tax liability?

Leveraging tax strategies helps you maximize returns and keep more of your hard-earned money. 

Cost segregation, an IRS-approved tax methodology, is a powerful tax strategy for real estate investors. It accelerates depreciation deductions, produces significant tax deferrals, and increases cash flow.

Download

Learn more about cost segregation in our extensive guide, “Maximizing Tax Savings: A Comprehensive Guide to Cost Segregation.”  

With our guide, we answer:  

  • What is cost segregation?
  • Why perform a cost segregation study? 
  • Which property types and assets are eligible for cost segregation? 
  • When should cost segregation be performed?  

 

Examples of Successful Cost Segregation Studies

Acquired Office Building (East Coast) 

  • Three-story building, 8 office suites, large parking garage in the basement that exceeds above-grade footprint
  • Depreciable Basis: $ 8,569,800
  • Placed-in-Service: 12/2022
  • Engineers moved 9.8% of assets to 5-year personal property and 9.3% to 15-year land improvements
  • First-year tax savings: $565,738 

Food Production and Distribution Facility

  • Gluten-free baked goods company
  • Addition to facility placed-in-service in 2022 – production lines in a clean-room environment, prefabricated cooler space, industrial bake oven and proofers, and extensive conveyor systems
  • Depreciable basis of addition: $18,056,636
  • Engineers moved 69.8% into 7-year, 1.9% into 15-year
  • First-year tax savings: $4,426,802 

Newly Constructed High-Rise Apartment Building (Urban) 

  • 312 units over 27 stories
  • Amenities include indoor and rooftop lounges and a fitness center.
  • Depreciable basis: $146,831,160
  • Placed-in-Service 12/2021
  • Engineers moved 11.3% to 5-year personal property and 0.6% to 15-year land improvements. (Urban setting means little potential for land improvements)
  • First-year net tax savings: $5,816,618 

Download The Cost Segregation Guide Now