Cost Segregation

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Anyone who has purchased, constructed, renovated, expanded or refurbished a commercial building within the last five years should consider a cost segregation study to maximize tax depreciation deductions. Our team of engineers and fixed asset specialists, led by Warren Kitchens, can help provide documentation to justify the accelerated deductions. The Tax Cuts and Jobs Act (the Act) (P.L. 115-97) presents significant opportunities for property owners, which we can discuss with you.

The capitalization and depreciation rules that apply for federal and state tax purposes are extremely complex. Our tax professional stay abreast of the latest rules and can assist you in properly classifying your building improvements between real property, which is depreciated over 39 and one-half years, and personal property that can be depreciated over 5 to 15 years. Costs that may qualify for a shorter depreciable life include wall partitions, carpet and painting, parking lots, security systems, HVAC systems, landscaping and other items.

Our cost segregation studies identify shorter-lived assets, such as electrical and mechanical systems, furniture, fixtures and equipment, reclassifying them to qualify for faster write-offs. DHG's Cost Segregation Studies are completed using an approach proven acceptable to the IRS and tax courts.

Key Points To Consider

  • Past just current construction, costs incurred within the last few years can yield a great benefit
  • The IRS generally agrees with the cost segregation process
  • Reclassified assets qualify for 5-, 7- or 15-year write-offs instead of the typical depreciation over 39 years

Our top industry practices include:

  • Construction
  • Dealerships
  • Financial Services
  • Government Contracting
  • Healthcare
  • Insurance
  • Manufacturing & Distribution
  • Not-for-Profit
  • Public Sector & Governmental
  • Real Estate
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Working within IRS established guidelines, our dedicated tax professionals have knowledge of both the construction process and the tax laws involving property classifications for depreciation purposes. In addition, we look beyond the
study itself to coordinate any other accounting issues related to the project.

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