What is a cost segregation study, and how does it work?

A cost segregation study is a tax strategy that helps property owners accelerate depreciation deductions and reduce taxable income. It works by identifying and reclassifying building components into shorter depreciation categories, such as five, seven, or 15 years, instead of the standard 27.5 or 39 years. By conducting a cost segregation study, businesses and real estate investors can improve cash flow, defer tax payments, and maximize savings. This study follows IRS guidelines and requires detailed analysis by tax and engineering professionals.