How Cost Segregation Studies Accelerate Depreciation Deductions

In Episode 77 of the Tax Policy Podcast, Lucas and Luna demystify cost segregation studies—a tax strategy that lets commercial real estate owners reclassify building components from 39-year property to 5-, 7-, or 15-year property, accelerating depreciation deductions. They walk through a concrete example: a $10 million office building where a cost segregation study identifies $2 million of personal property and land improvements, boosting first-year depreciation from roughly $230,000 to nearly $700,000. They explain the engineering-based study process, the role of IRS audit guidelines, and how this strategy has survived tax reform. Lucas notes that the Tax Cuts and Jobs Act of 2017 enhanced the benefit by allowing bonus depreciation on qualified improvement property. The hosts also discuss when it makes sense—typically buildings acquired for $1 million or more—and the risk of recapture upon sale. A practical episode for investors, developers, and tax professionals alike. #CostSegregation #Depreciation #RealEstateTax #TaxStrategy #CommercialRealEstate #BonusDepreciation #IRS #TaxCutsAndJobsAct #TaxReform #MACRS #PropertyTax #TaxPlanning #Business #Economics #FexingoBusiness #BusinessPodcast #TaxPolicyPodcast #Fexingo Keep every episode free: buymeacoffee.com/fexingo