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Cost Segregation For Commercial Buildings

If you’re an investor who has recently acquired or are building a commercial property, you should know about the advantages of having a cost segregation study performed for your business.  Cost segregation studies are most useful for commercial real estate.

As your building ages, it loses value. That’s called depreciation. When you do a cost segregation study, it classifies your building’s components (like the lighting system) into shorter recovery periods so you can write off the components faster in your taxes and reduce taxable income. The study carves out certain qualifying portions of your building into five-, seven- and 15-year lives that are normally accounted for in 39- or 27.5-year categories. 

Here are some examples:

  • 39-year property: Windows, walls, doors, roofs, HVAC systems, plumbing, electrical
  • 15-year property: Exterior improvements such as fencing, exterior signage, asphalt, curbs, landscaping, exterior lighting
  • 5-year property: Carpeting, appliances, specialty lighting, woodwork, unit partitions, individual unit locks, security, business-specific heating and ventilation systems

Benefits of a Cost Segregation Study

  • An immediate increase in cash flow
  • A reduction in current tax liability
  • The deferral of taxes
  • The ability to reclaim “missed” depreciation deductions from prior years (without having to amend tax returns)

List of Eligible Commercial Businesses

  • Restaurants (both eat-in and fast-food)
  • Retail and chain stores
  • Grocery stores
  • Shopping malls
  • Office buildings
  • Gas stations
  • Auto sales lots
  • Hospitals and healthcare facilities
  • Factories and manufacturing plants
  • Theme parks 
  • Sports stadiums and arenas 
  • Hotels
  • Motels 
  • Rental apartment complexes.

Case Study: Restaurant

cost segregation case study

eBook: Property owners guide to Cost Segregation

Learn how you can significantly increase your tax savings with a Cost Segregation analysis.

Tools: Dispostion Calculator

Calculate a disposition deduction for fixed assets removed, demolished, retired or no longer in service.

Webinars: Cost Segregation

Testimonials: Our valued clients

Melissa Flagstad, Partner
Melissa Flagstad, PartnerUS Facilities Lighting
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“Engineered Tax Services (ETS) found 250k in tax credits for one of our manufacturing clients. ETS makes our business bigger and stronger. Not much more you can ask from a partner.”
William Mays
William MaysGoldin, Pesier & Pesier, LLP
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“The entire ETS team includes professionals of the highest caliber…they have proven to be a true partner to our firm – as well as the clients we have engaged. With ETS, we have added Section 179D to our service offerings. This has gotten us to the table with many coveted prospects with whom we had been previously shut out. ETS is an outstanding partner, demonstrating high intelligence, entrepreneurial spirit, expertise, quality, professionalism and responsiveness. We are looking forward to incorporating their cost segregation services for the benefit of our clients in the near future.”
Goldstein Schecter Kosh
Goldstein Schecter KoshGoldstein Schecter Kosh
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“Engineered Tax Services has been a very valuable engineering resource to our firm over the past decade. We find their firm the only licensed engineering firm to be uniquely qualified to handle the complex issues regarding cost segregation, 263a, 179D and repair and maintenance. We did our due diligence and the results speak for themselves as Engineered Tax Services is the dominant engineering resource to the CPA community.”
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Tele-Engineering™: A Contactless Study as a COVID Safeguard

While traditionally cost segregation studies are conducted onsite, the COVID-19 pandemic calls for a safe alternative—one that provides you with the same ability to reduce tax liabilities and increase cash flow.

Tele-Engineering – a virtual approach to cost segregation – offers the same high level of detail and support as in-person visits, while eliminating costs and social safety issues.

Case Studies Cost Segregation

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Cost Segregation Study on a $4.5 Million Hotel in Escondido, CA

Without a Cost Segregation study, a $4.5 Million Hotel in Escondido, CA, purchased in 2018 would have generated a 1st year depreciation of $38,461.54. By …

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Cost Segregation Study on a $13 Million Hotel in Provo, UT

Without a Cost Segregation Study on a $13 Million Dollar Hotel in Provo, UT purchased in 2018 would have generated a 1st-year depreciation of $428,205.00. …

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