Cost Segregation

The US tax code, while standardizing the depreciation of real estate over a 39-year period, provides the opportunity to carefully itemize certain aspects of real estate that may be more appropriately defined as personal property. Non-structural items, including specialty lighting, interior decorating, exterior landscaping and even the labor costs associated with the installation of these items can be reclassified for accelerated depreciation. By segregating these building costs, property owners can realize a faster return on their capital investments. Highly customized building applications including research centers, manufacturers, restaurants and hotel uses may find substantial percentages of their projects will advance from 39-year to five-or seven-year depreciation schedules. The result? Immediate tax benefits.

Any building in the United States currently under construction or remodeled since 1987 may be eligible. For cost/benefit purposes, an analysis would be beneficial for buildings valued at a minimum of $1 million.

Our Cost Segregation Process:

  • Complete a preliminary review to quantify the benefits of a study
  • Gather basic information about the property such as building and component engineering drawings
  • Determine if an in-depth review will yield a significant enough result to warrant the expense of analysis
  • Discuss the review, present findings and fee estimate
  • Supply a detailed report of estimate and actual costs
  • Site visit and review made by a PM Business Advisory expert
  • Work with collaborative architectural engineering professionals to assemble data and allocate costs
  • Assign proper classification of your assets
  • Deliver carefully prepared comprehensive report as part of our review meeting