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ARTICLE · 07 MARCH 2022

A Cost Segregation Study Is One Way To Boost Cash Flow

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If your business is planning to buy, build or substantially improve real property, a cost segregation study can help you accelerate depreciation deductions, reduce your taxes and boost your cash flow.

United StatesReal Estate and Construction
Anita Wescott
Anita Wescott
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If your business is planning to buy, build or substantially improve real property, a cost segregation study can help you accelerate depreciation deductions, reduce your taxes and boost your cash flow. Even if you have invested in real property in previous years, you may have an opportunity to do a lookback study and catch up on the deductions you missed.

Related Read: Why a Cost Segregation Study is a Good Idea — Accelerate Depreciation Deductions to Reduce Taxes and Boost Cash Flow

HOW IT WORKS

Generally, commercial real property (other than land) is depreciable over 39 years and residential real property is depreciable over 27.5 years. A cost segregation study identifies real estate components that are properly treated as personal property depreciable over five or seven years or land improvements depreciable over 15 years. By allocating a portion of your costs to these shorter-lived assets, you can accelerate depreciation deductions and substantially reduce

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