Cost Segregation - 100% Bonus Depreciation kicks in on properties that are placed in service on or after 1/19/2025

People discussing diagrams and notes with laptops on a wooden table.

What Is Cost Segregation?

Cost Segregation is a strategic tax planning tool that allows commercial and residential real estate owners to accelerate depreciation deductions, reduce taxable income, and improve cash flow.

By identifying and reclassifying assets within a property into shorter depreciation categories (such as 5, 7, or 15 years instead of 27.5 or 39 years), property owners can realize significant tax savings—especially in the early years of property ownership.

Key Benefits of Cost Segregation:

Before OBBBA, bonus depreciation was set to phase down:

  •  60% in 2024

  • 40% in 2025

  • 20% in 2026

  • 0% in 2027

OBBBA scrapped that phase-down period and permanently restored 100% bonus depreciation for qualified property.

100% bonus depreciation remains available for property with a MACRS recovery period of 20 years or less, including:

  • Furniture, fixtures, and equipment

  • Interior finishes and flooring

  • Qualified Improvement Property (QIP)

  • Exterior improvements like landscaping, paving, or site lighting

Used property still counts, as long as the taxpayer didn’t previously use it themselves.

For new acquisitions or improvement projects, proactively identifying these assets allows for smoother coordination with your tax and engineering teams.

Immediate Tax Savings

  • Increase your first-year depreciation deduction significantly

  • Decrease your taxable income—put more money in your pocket

Boost Cash Flow

  • Enhanced depreciation means lower taxes and more liquidity

  • Funds can be reinvested into business growth, property upgrades, or other investments

Retroactive Application

  • Missed opportunities? You can catch up depreciation without amending prior returns (using IRS Form 3115)

Applicable to Many Property Types

  • Commercial buildings, retail centers, apartment complexes, industrial properties, medical offices, and more

  • Even residential rental properties qualify (not primary residences)

Who Should Consider Cost Segregation?

You may benefit if you:

  • Purchased, built, or renovated real estate for $500,000 or more

  • Own income-producing property (commercial or residential rental)

  • Recently completed a property expansion, remodel, or tenant improvement

  • Are planning a sale, 1031 exchange, or estate planning move

How It Works

  1. Engineering-Based Study
    Our specialists analyze your property and construction costs to identify assets that qualify for accelerated depreciation.

  2. Asset Reclassification
    Property components like flooring, lighting, cabinetry, electrical systems, and more are categorized into shorter asset lives.

  3. Tax Strategy Delivery
    A comprehensive report is delivered—compliant with IRS guidelines—detailing depreciation schedules and maximizing deductions.

What Assets Can Be Reclassified?

  • Carpet and floor coverings

  • Cabinets, countertops

  • Interior and exterior lighting

  • Electrical and plumbing for equipment

  • Specialty HVAC systems

  • Landscaping, sidewalks, fences

  • Parking lots, signage, stormwater systems

These components can often be depreciated over 5, 7, or 15 years, compared to 27.5 or 39 years for the building shell.

Example: Real Savings from Cost Segregation

Property Purchase: $1,000,000
Without Cost Segregation: ~$25,600/year in depreciation
With Cost Segregation: ~$150,000 in first-year depreciation (depending on asset mix and bonus depreciation rules)

Tax Savings Could Exceed $50,000+ in Year One!

Is Cost Segregation IRS-Compliant?

Yes—when performed by qualified professionals using an engineering-based study, cost segregation is fully compliant with IRS guidelines (IRS Audit Technique Guide available).

A high-quality study provides audit-ready documentation, offering confidence and protection.

Why Work With Us?

Our team specializes in helping property owners unlock hidden tax savings:

  • In-depth engineering and tax expertise

  • National coverage with localized support

  • Fast turnaround and audit-ready reporting

  • Collaboration with your CPA or tax advisor

We ensure you maximize benefits while maintaining full IRS compliance.

Start Saving with Cost Segregation Today

Own property worth $500,000 or more? Let us show you how much you could save.