Tax Benefits Through Cost Segregation

Cost Segregation & Tax Benefits

Cost segregation is a crucial financial strategy that accelerates depreciation deductions, leading to substantial tax savings for property owners and businesses.

Companies can free up significant cash flow by depreciating buildings faster than the traditional 39-year schedule. This strategy is particularly valuable for businesses that have recently purchased, constructed, or renovated commercial properties.

Tri Energy Savings thoroughly analyzes properties to identify assets that can be reclassified for faster depreciation. Our detailed categorization allows for faster depreciation of certain building components, including lighting systems, electrical infrastructure, and other qualifying improvements.

What Is Cost Segregation?

Cost segregation is an IRS-approved tax strategy that involves reclassifying certain building components from real property (depreciated over 39 years) to personal property (depreciated over 5, 7, or 15 years). By accelerating the depreciation timeline, property owners can significantly reduce their current tax liability and improve cash flow.

Benefits

The benefits of cost segregation are substantial. Property owners can defer federal and state income taxes, increase cash flow in the early years of ownership, and retroactively claim missed depreciation deductions. For many businesses, cost segregation studies result in tax savings of 5-8% of the building's depreciable basis in the first year alone.

Who Qualifies?

Cost segregation is available to any property owner who has constructed, purchased, expanded, or remodeled commercial real estate. This includes office buildings, retail centers, warehouses, manufacturing facilities, restaurants, hotels, apartment complexes, and more. Even properties acquired years ago may qualify for a "look-back" study.

How We Help

Tri Energy Savings works with certified cost segregation professionals to conduct thorough property analyses. We identify lighting systems, electrical components, and other building improvements that qualify for accelerated depreciation. Our team coordinates the entire process, from the initial property assessment to the final engineering-based study report that your CPA can use at tax time.