Engineering Based Cost Segregation

Engineering Based Cost Segregation is an engineering process which enables commercial and investment property owners to accelerate the deprecation benefit of their properties. 

Real Property (IRS Code section 1250) is depreciated over 39 years for commercial properties and over 27.5 years for residential properties.  These are the depreciation durations typically used by property owners.  An engineering based cost segregation study that complies with the IRS Principal Elements of a Quality Cost Segregation Study can legally reallocate a substantial portion of the cost basis of a building to Tangible Personal Property (IRS Code section 1245).  Code section 1245 property is depreciated over 5 or 7 years.  The benefit to the building owner is that the depreciation deduction for the first 6 years after the study is increased substantially, which reduces income tax liabilities during those years.  The resulting effect is an increase in cash flow for the building owner.