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Cost Segregation

Cost Segregation & Engineering-based Cost Segregation Studies

Cost Segregation

Cost segregation is a tax strategy that allows taxpayers to accelerate the depreciation of certain assets in their commercial or residential rental properties³⁵. By identifying and reclassifying assets that have shorter depreciable lives, such as carpeting, furniture, fixtures, and equipment, taxpayers can reduce their taxable income and increase their cash flow¹³.

An **engineering-based cost segregation study** is a set of calculations created by an independent firm with extensive tax and construction knowledge that follows the IRS-approved method for cost segregation³⁴⁵. 

An engineering-based study involves reviewing actual cost records and construction documents, conducting a site visit to analyze the property's components, and applying the appropriate tax rules and court cases to determine the asset classifications and depreciation schedules⁴⁵. An engineering-based study provides the most accurate and defensible results for cost segregation⁴.

(1) Cost Segregation Study for Commercial Property | CSSI ® - Cost ....

(2) Cost Segregation Studies | M&E Cost Segregation.

(3) Updated IRS audit guide helps taxpayers improve cost segregation studies.

(4) Cost Segregation Methods Are Not Created Equal.

(5) Cost Segregation Studies FAQs - Moss Adams.

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