What a cost segregation study is, in plain terms

For tax purposes a building is usually depreciated over decades. Parts of it, such as certain fixtures, finishes and site improvements, can qualify for much shorter periods.

What the study does

Engineers review the property and its costs and assign each component to the correct category. The result is a report your accountant uses to calculate depreciation.

Why owners do it

Moving costs into shorter categories brings deductions forward. Whether that helps depends on your income and how long you plan to hold the property.

Ask your tax professional how the rules apply to you before ordering a study.