cost segregation

Cost Segregation Studies: The Tax Strategy That Reclassifies Building Components Into Shorter Recovery Periods

Cost segregation studies reclassify portions of building costs from 39-year or 27.5-year MACRS to 5-year, 7-year, or 15-year recovery periods. The accelerated depreciation produces substantial first-year and early-year tax savings. Contractors benefit as owners of their own buildings (offices, shops, equipment yards) and sometimes as service providers recommending studies to client-owners. Understanding cost segregation opportunity and methodology is valuable.