Cost Segregation

Accelerate depreciation of certain property types to maximize operational cash flow

The tax treatment of tangible property related to real estate property can result in a significant source of accelerated cash flow to many businesses. Cost segregation studies can provide the insight and analysis to help you properly classify assets and maximize tax savings, and can be particularly helpful to businesses that are building, purchasing or renovating property. The proper classification of assets can reduce short-term tax liabilities, thereby freeing up resources to reinvest in the business.

Commercial buildings and residential rental property have a depreciable life of 39 years and 27.5 years, respectively. The nonstructural elements within these buildings, which may include carpeting, wall coverings, and specialized mechanical, plumbing and electrical costs, can have a depreciable life of only five to seven years. RSM efficiently and effectively applies the principles of variable depreciation rates and the varying treatment of property types across the states to achieve an optimal cost segregation result.  

Our cost segregation practice brings together professional engineers, certified public accountants and real estate appraisers dedicated to providing reliable, objective and effective cost segregation analysis. We can:

  • Reconcile construction costs to specific assets
  • Conduct additional tax research
  • Identify and quantify useful elements
  • Assign estimated useful lives
  • Document results in a detailed, defensible report

With a thorough cost segregation analysis in hand, your business can adjust the timing of taxes owed on property related to capital investment projects or make retroactive adjustments that may result in a tax refund. Either way, this IRS-approved tax planning strategy can help your business maximize cash flow and minimize overpayment. 

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