Cost Segregation

Cost segregation is a strategic method used by property owners and investors to identify and reclassify parts of a building's costs into shorter depreciation schedules. Instead of depreciating the entire property over 27.5 or 39 years, specific components like electrical systems, flooring, or landscaping are categorized for faster depreciation—often over 5, 7, or 15 years. This accelerates deductions, reducing taxable income in the early years of ownership. By doing so, property owners can improve cash flow and optimize tax benefits while remaining compliant with tax regulations.