Cost Segregation is used to accelerate depreciation for investment property by breaking out the tangible personal property and land improvements that are normally grouped together as a real property. Personal property and land improvement can generally be reclassified as 5, 7, or 15-year property instead of 27.5 or 39-year property. The study doesn’t increase the overall amount of depreciation of an asset, but will accelerate depreciation by shortening the recovery life of the property. Cost Segregation allows property owners to increase cash flow, reduce tax liability, and allow for a loss deduction when a building component gets replaced before it fully depreciates.
