What Is Cost Segregation? (Real Estate Explained #3)

Most owners depreciate a commercial building over 39 years. A cost segregation study breaks the building into parts that can be written off much faster, and that can change your year-one taxes dramatically.

  • 39 years vs. cost seg: On a $3M coffee shop, straight-line depreciation gives roughly $58K in year-one deductions. With cost segregation, it can be roughly $715K.
  • Bonus depreciation: 100% bonus depreciation is back for property acquired after January 19, 2025.
  • Gas stations: These can qualify as 15-year property.
  • Know the trade-offs: depreciation recapture when you sell, how a 1031 exchange fits in, and the step-up in basis for heirs.

Educational only, not tax advice. Consult a CPA.

Questions? Email me at Dan@CooperLandCompany.com or visit cooperlandcompany.com.

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