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Entities & Tax

Cost Segregation Study

An engineering-based analysis that reclassifies parts of a building into shorter depreciation schedules (5, 7, 15 years).

Typical cost-seg on a $1M commercial property front-loads $150–300k of depreciation into year one — massive first-year tax shelter. Best paired with bonus depreciation.

Related

Terms

  • Depreciation
  • Bonus Depreciation

More in Entities & Tax

  • 1031 Exchange— IRS §1031 lets you defer capital gains tax when selling investment real estate and reinves…
  • Qualified Intermediary (QI)— A neutral third party that holds 1031 exchange proceeds — required by the IRS.
  • Depreciation— The non-cash annual expense that lets you deduct the wear-and-tear of a rental building ag…
  • Bonus Depreciation— A federal provision letting investors deduct a large percentage of qualifying property in …
  • Depreciation Recapture— When you sell, the IRS 'recaptures' depreciation you claimed, taxing it at up to 25%.
  • Capital Gains Tax— Federal tax on the profit from selling an asset held for gain.

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