Cost Segregation
Cost Segregation is the method of reclassifying the components and improvements of a commercial building from a 39-year life, to a shorter depreciable life. This process allows the assets to be depreciated on a 5, 7 or 15-year schedule instead of the traditional 27.5 or 39-year depreciation schedule of real property. Thus, current taxable income will be greatly reduced and cash flow could increase by 5% – 8% of the building’s cost.