Put More of Your Property Investment to Work Now

The Opportunity

Accelerate Depreciation. Improve Cash Flow.

A cost segregation study examines the acquisition, construction, renovation, or improvement costs of a property and identifies components that may qualify for shorter depreciation periods.

Moving eligible costs from long-lived building property into shorter-lived asset classifications can accelerate depreciation deductions and reduce current taxable income.

Current bonus depreciation provisions can make that acceleration particularly meaningful for certain qualifying property.

Existing Properties

The Opportunity May Not Be Limited to New Acquisitions

Properties acquired or improved in prior years may also warrant review. A cost segregation analysis can determine whether eligible assets were originally classified using longer depreciation lives than necessary.

Where appropriate, the specialty tax work can include evaluating the accounting and tax treatment necessary to implement the study for property already in service.

What Good Looks Like

The Study Should Become Part of Your Accounting

A cost segregation study creates value only when its results are properly reflected in the company's fixed asset records, depreciation schedules, accounting system, and tax reporting.

Building components identified by the study should be organized into appropriate asset classifications and connected to the property and accounting records supporting them.

Future additions, replacements, renovations, and dispositions should then be recorded consistently so the accounting remains useful after the original study is complete.

• Review property acquisition, construction, and improvement costs.
• Identify potential shorter-lived building components and land improvements.
• Complete the required engineering and specialty tax analysis.
• Implement the resulting asset classifications in the accounting system.
• Update fixed asset and depreciation schedules.
• Establish a process for future additions, improvements, and dispositions.

Commercial Property Accounting

Make the Property Accounting Work Together

Cost segregation is often part of a larger property accounting environment that includes fixed assets, capital improvements, depreciation, CAM accounting, tenant recoveries, and property-level financial reporting.

The objective is to connect the tax opportunity to accounting records that remain accurate and useful throughout the ownership of the property.