Spotlight: Cost Segregation

Cost Segregation Studies offer the opportunity to increase post-tax cash flows from an investment property by accelerating depreciation expense and deferring income taxes. To accomplish this, a team of experts in construction, engineering and accounting reallocate portions of a property’s cost basis from real property (long term depreciation life) to personal property or site improvements (short term depreciation life).

The benefits of a Cost Seg Study still apply for single tenant net lease (STNL) properties: STNL properties are normally easier to assess, meaning a Cost Seg can be commissioned for much less than for a more complex property. On a relative basis, the present value tax savings can be just as great for a STNL property of a few million dollars or less as for a larger asset.