What is a Cost Segregation Study? 

A cost segregation study is an analysis of a commercial property that separates the various components and costs of the property into different categories for tax purposes. This study is typically conducted by a certified public accountant or engineer, who will review the property and identify the different components that make up the property, including the building structure, land improvements, personal property, and land.

The purpose of a cost segregation study is to determine the appropriate tax treatment of each component of the property. Some components may be classified as personal property, which can be depreciated over a shorter period of time, resulting in higher tax deductions in the short term. Other components, such as the building structure and land, may be classified as real property and depreciated over a longer period of time.

By conducting a cost segregation study, businesses can potentially save a significant amount of money on their taxes by identifying and classifying the various components of their property in the most tax-advantageous manner. This can be especially beneficial for businesses that have recently purchased or renovated a commercial property, as they may be able to take advantage of these tax deductions in the current tax year.

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