All About Cost Segregation by Eli Loenbenberg, CEO Download PDF

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"A cost segregation study is a tax and engineering analysis of any real estate, including leasehold improvements. It is designed to accelerate the tax deductions for depreciation by reclassifying eligible assets to shorter recovery periods.

TOM VARNEY
Engineer - Madison SPECS

Eligibility

WHO QUALIFIES FOR A COST SEGREGATION STUDY?

Cost Segregation studies are one of the most valuable tax strategies for owners of commercial real estate. You stand to benefit from a Cost Segregation study if:

  • You have purchased or constructed commercial real property since 1986
  • You have renovated, expanded or restored an existing property
  • You have installed leasehold improvements in an existing property
  • You have paid income taxes

WHAT TYPES OF PROPERTIES QUALIFY?

All types of properties qualify for Cost Segregation. The average percentage that can be reallocated to shorter depreciation varies by type.

  • Restaurants (20-45%)
  • Hotels (25-50%)
  • Shopping malls (20-40%)
  • Medical/dental (20-35%)
  • Warehouses (10-20%)
  • Auto dealerships (15-35%)
  • Hospitals (20-40%)
  • Retail facilities (30-60%)
  • Theme parks (15-35%)
  • Grocery stores (20-35%)
  • Apartment buildings (15-45%)
  • Manufacturing facilities (35-45%)
  • Office buildings (10-25%)
  • Resorts (20-45%)
  • Banks (35-50%)
  • Self-storage facilities (20-80%)
  • Technology centers (20-60%)

WHAT ASSETS ARE ELIGIBLE FOR RECLASSIFICATION?

Eligible assets are generally assets, fixtures or related elements that are either unnecessary for the operation of the building itself or are temporary structures. They can include:

  • Certain electrical/mechanical systems
  • Redundant HVAC systems
  • Decorative lighting or moldings
  • Floor coverings
  • Wall coverings
  • Window treatments
  • Signage
  • Sidewalk and curbing
  • Parking lots and curbing
  • Landscaping, fencing and outdoor lighting
  • Swimming pools
  • Foundations, mezzanines, stairs and platforms
  • Beams and columns
  • Sewer and drainage systems
  • Hospitality fixtures
  • Communication systems
  • Distribution panels and wiring
  • Millwork
  • Vents and exhaust systems
  • Specialized air filtration
  • Specialized fire protection systems
  • Security access and monitoring systems
  • Computer data and power

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