The Economic Power of Cost Segregation
Cost segregation is one of the most powerful tax planning strategies for property owners. By accelerating depreciation, owners can significantly increase near-term cash flow and maximize the time value of money.
Accelerated Cash Flow
Standard 39-year depreciation is slow. Cost segregation reclassifies assets into 5, 7, or 15-year lives, front-loading tax deductions into the early years of ownership.
Immediate ROI
A typical study generates $30k to $100k+ in tax savings for every $1M of property value, creating immediate capital for reinvestment.
Technical Framework: Section 1245 vs 1250
IRS Code Sections 1245 and 1250 distinguish between tangible personal property and real property. A well-executed cost segregation study typically reclassifies 15-40% of a building's depreciable basis into shorter-lived asset classes, depending on property type.
| Asset Type | Standard Depreciation | After Cost Segregation | Impact |
|---|---|---|---|
| Interior Finishes | 27.5-39 Years | 5 Years | Up to 8x Faster |
| Land Improvements | 27.5-39 Years | 15 Years | 2-3x Faster |
| Mech/Elec/Plumbing Systems | 27.5-39 Years | 5-15 Years | 2-8x Faster |
100% Bonus Depreciation Restored: The One Big Beautiful Bill Act (signed July 4, 2025) permanently restored 100% first-year bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. This means every dollar reclassified via a cost segregation study into 5-, 7-, or 15-year property can be fully deducted in Year 1. Section 179 was also doubled to $2.5M. Cost segregation has never been more valuable.
Driving Revenue for Accountants
Accountants who offer cost segregation don't just “do taxes”—they provide high-alpha advisory services. With SegFlow AI, you can deliver these high-value studies at a fraction of the traditional cost.
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