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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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Cost Segregation

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