Most real property owners can benefit significantly by reallocating asset costs to other than “building.” The basis for the reallocation is a cost segregation study that identifies and classifies the costs to acquire, construct or expand commercial real properties, including office building, or manufacturing or distribution facilities.
The objective of a cost segregation study is to properly classify costs into the correct categories for tax depreciation purposes. The re-categorized costs can be depreciated over fewer years allowing the tax benefits to be recouped sooner. The average potential tax savings are typically about 1 to 1.5 percent of the cost of an office building, and up to 3 to 3.5 percent of the cost of a manufacturing or distribution facility.
