Intro to Cost Segregation

If you own real estate for investment or business purposes, cost segregation is an essential strategy to know about. Typically, real estate is depreciated over a long period—27.5 years for residential properties and 39 years for commercial properties. However, cost segregation allows you to accelerate this depreciation schedule, enabling you to deduct a larger portion of the property's value in the earlier years. This can significantly boost your cash flow and provide substantial tax savings in the short term.

The cost segregation process begins with a detailed study conducted by experts, who analyze various property components such as plumbing, electrical systems, roofing, and more. The goal is to identify components of the property that can qualify for shorter depreciation periods—such as five, seven, or 15 years—rather than the standard 27.5 or 39 years. This results in higher depreciation deductions and reduced taxable income in the earlier years of property ownership, maximizing your tax benefits.

Because cost segregation is a complex process with many nuances, it’s important to work with a qualified expert who understands the intricacies of the study. Choosing the right professional can ensure that you receive the full tax advantages available to you. If you're interested in conducting a cost segregation study, don’t hesitate to reach out to us at Protego Advisers for assistance in finding a vetted expert who can guide you through the process.

About Protego Advisers: 

We specialize in crafting strategic plans that help businesses minimize their overall tax liabilities while strictly adhering to legal standards. The U.S. tax system is one of the most intricate and historically complex financial frameworks in the world. Our expertise allows us to navigate this system on behalf of our clients, enabling them to retain more of their earnings with confidence and compliance.