Cost Segregation Studies

Money isn’t growing on trees,
But it could be hidden in your building

Commercial properties are depreciated over 39 years, but with a cost segregation study the property owner can accelerate the depreciation in the first years of the holding period and defer taxes to later years. After the U.S. tax court ruled in 1997 that cost segregation studies are allowable, many taxpayers have taken advantage of their benefits.

Our studies will segregate the assets into 5-year (e.g. millwork, computer equipment, etc.), 7-year and 15-year property (site improvements like paving, landscaping, lighting, etc.). The residual property is the actual real estate depreciated over the normal 39-year period.

Cost Savings Example Shopping PlazaCost Savings Example Apartment Complex

When should you think about a Cost Segregation Study?

  • You purchased or constructed a commercial building in the last years
  • You renovated, remodeled, restored or expanded an existing building
  • You paid for tenant build-out

Cost Segregation Studies can be applied to prior years – consult your tax advisor.

Benefits of the Cost Segregation Study:

  • Increased cash flow with accelerated depreciation – your federal and state tax liabilities can be reduced
  • A detailed breakdown of building components into real property and tangible property can reduce costs for repair, remodeling and replacement
  • Cost Segregation Studies can assist in reducing real estate tax
  • A segregation into assets can reduce insurance costs

This information is not intended to serve as tax advice, nor is the producer of this information offering tax services. If you feel a Cost Segregation Study is right for you, please consult your tax advisor.  Staebler Appraisal and Consulting is performing the Cost Segregation Study in form of a Detailed Cost Estimate Approach in cooperation with your CPA. Should your CPA not specialize in Cost Segregation, we can connect you with a CPA in your area.

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