Cost segregation for commercial real estate

At Cost Recovery Experts (CRE), we specialize in helping commercial property owners unlock maximum tax savings and cash flow through engineer-backed cost segregation studies. Our services are designed to reduce tax liability, improve financial statements, and provide peace of mind with IRS audit protection.

• Engineer-Based Cost Segregation Studies
  Detailed analyses that reclassify building components into shorter depreciation categories, maximizing current-year deductions.
   
• IRS Audit Protection
  All studies are prepared to withstand IRS scrutiny, giving you confidence that your tax positions are fully supported.
   
• Depreciation Schedule Review & Optimization
  Ensure your existing schedules capture every eligible asset and maximize depreciation benefits.
   
• Look-Back Studies & Retroactive Benefits
  Recover missed depreciation from prior years to improve past tax returns and increase cash flow.
   
• Multi-Property Portfolio Analysis
  Customized strategies for owners managing multiple commercial assets, helping you capture savings across your entire portfolio.

Cost segregation is a strategic way to boost your cash flow by accelerating depreciation deductions on your commercial property. By reclassifying certain building components from 39-year property to 5-, 7-, or 15-year property, you can front-load depreciation, reducing your current-year tax liability.

From decorative lighting and security systems to specialized wiring and equipment, many components of a commercial building qualify for shorter depreciation schedules. A thorough, engineer-backed cost segregation study ensures these opportunities are accurately identified, helping you maximize your tax savings.

In a cost segregation study, CRE identifies and reclassifies building components into shorter-lived categories to maximize depreciation benefits. Common examples of property that can be reclassified include:

This category includes items that are not a structural component of the building and can be easily moved. Examples include:

• Decorative lighting fixtures
• Carpeting and other removable flooring
• Window treatments (blinds, drapes, etc.)
• Movable partitions or walls
• Security equipment (cameras, sensors, etc.)
• Certain types of cabinetry (if not permanently affixed)
• Specialized wiring for equipment
• Certain types of plumbing fixtures (if they primarily serve equipment rather than people)
• Certain types of electrical outlets (if they primarily serve equipment)
• Data and communication cabling
• Certain types of HVAC equipment (if it primarily serves equipment rather than people)

This category includes all tangible personal property not included in the five-year or 15-year categories. Examples include:

• Office furniture (desks, chairs, etc.)
• Telephones and communication equipment
• Computers and related equipment
• Printers and copiers
• Audio and video equipment
• Certain types of window treatments (if not included in five-year property)
• Certain types of cabinetry (if not included in five-year property)

Also known as “land improvements,” this category includes items that are part of the property but not part of the building itself. Examples include:

• Sidewalks
• Parking lots
• Fencing
• Landscaping
• Roads
• Certain types of lighting (if it primarily serves the land rather than the building)
• Stormwater drainage and retaining ponds
• Retaining walls
• Certain types of signage (if it is affixed to the land rather than the building)

A cost segregation study can significantly enhance your financial performance. By accelerating depreciation deductions, you reduce taxable income, lower your overall tax liability, and increase after-tax cash flow—funds that can be reinvested in your business or distributed to shareholders.

Reclassifying assets into shorter-lived categories increases current depreciation expense, which reduces net income on your income statement. As a non-cash expense, this adjustment does not impact your cash flow. While the total value of assets on your balance sheet remains unchanged, the composition shifts to reflect lower net property values and higher accumulated depreciation.

At CRE, all our cost segregation studies come with free IRS audit protection, giving you peace of mind and confidence that your tax positions are fully supported.