Cost segregation in a COVID-19 world: a key tax strategy that can provide CRE a silver lining

We all know the hits that certain sectors in commercial real estate have taken due to COVID-19. Depending on which expert predictions you choose to believe, there is a chance that the worst of the crisis is yet to come. The uncertainty the future holds leaves many investors searching for a plan to position themselves to weather more potential storms. One promising avenue is through a cost segregation study. What is cost segregation and how can it help me? This IRS-approved, engineering-based tax strategy maximizes depreciation deductions on commercial real estate property. Commercial buildings generally must be depreciated over 27.5 or 39 years. However, the IRS has designated certain types of building components and land improvements that can be depreciated at a much faster rate of 5, 7 or 15 years (such as flooring, accent lighting, decorative millwork and landscaping).


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