COST SEGREGATION
Your building may be depreciating slower than it needs to.
Cost segregation identifies portions of a property that may qualify for shorter depreciation periods, potentially accelerating deductions into earlier years. Apex performs cost segregation studies in-house and evaluates the results within the context of your broader tax strategy.
IN-HOUSE STUDIES • TAX STRATEGY INTEGRATION • NATIONWIDE
01 / THE OPPORTUNITY
Not every part of a building has to depreciate on the same timeline.
When real estate is purchased or constructed, much of the property is generally depreciated over 27.5 or 39 years. A cost segregation study examines the property’s components to identify assets that may qualify for shorter recovery periods.
TRADITIONAL DEPRECIATION
27.5 / 39 years
Much of the property’s depreciable basis is generally recovered over the building’s standard depreciation period.
COST SEGREGATION
5 / 7 / 15 years
Certain qualifying components may be reclassified into shorter recovery periods, accelerating when depreciation deductions are recognized.
The total depreciable basis does not increase simply because a cost segregation study is performed. The strategy primarily changes when qualifying depreciation deductions may be recognized.
02 / THE TAX IMPACT
Cost segregation is about more than depreciation. It’s about timing.
The value of accelerated depreciation depends on the taxpayer’s broader tax situation.
A large deduction isn’t automatically a valuable deduction.
Income, marginal tax rates, passive activity rules, material participation, other losses, property plans and future transactions can all affect whether accelerated deductions create a meaningful current tax benefit.
That’s why Apex evaluates cost segregation as a tax strategy—not simply as a report.
03 / PROPERTY TYPES
Cost segregation can apply to more than commercial buildings.
Studies may be appropriate for many types of income-producing real estate, depending on the property, basis, timing and taxpayer’s circumstances.
Multifamily
Apartment buildings and multifamily investment properties.
Short-Term Rentals
Qualifying vacation and short-term rental properties.
Office
Office buildings and professional spaces.
Retail
Retail buildings and tenant-improved spaces.
Industrial
Warehouses, manufacturing facilities and industrial properties.
Hospitality
Hotels and other hospitality properties.
Medical
Medical offices and specialized healthcare facilities.
New Construction & Renovations
Newly constructed properties and substantial renovations may also present cost segregation opportunities.
The better question isn’t only whether a property can be studied. It’s whether the potential tax benefit justifies the study.
Evaluate My Property →
04 / FEASIBILITY FIRST
Not every property needs a cost segregation study.
Before recommending a full study, the economics should make sense. Property basis, acquisition date, improvements, ownership plans and the taxpayer’s ability to use accelerated deductions all matter.
A study may be worth exploring when:
You purchased or constructed income-producing real estate
The property has a meaningful depreciable basis
You completed substantial renovations or improvements
Accelerated deductions may be usable in your tax situation
You expect to hold the property long enough for the economics to make sense
You purchased the property in a prior year but never completed a cost segregation study
A study may be less valuable when:
The depreciable basis is relatively small
The expected tax benefit is limited
Accelerated losses may not currently be usable
A near-term sale changes the economics
The cost of the study outweighs the expected benefit
Our goal isn’t to sell every property owner a study. It’s to determine whether the numbers justify one.
05 / WHY APEX
Your cost segregation study shouldn’t exist in a vacuum.
Many cost segregation providers deliver a report and their involvement ends there. Apex performs cost segregation within a tax advisory firm, allowing the study to be evaluated alongside the client’s broader tax situation and the reporting that follows.
Study
We analyze the property and identify components that may qualify for shorter recovery periods.
Strategy
We consider how accelerated depreciation interacts with the client’s broader tax situation.
Implementation
The study is prepared with the tax reporting and documentation that follow in mind.
The study is not the strategy. What you can actually do with the result is what matters.
One firm. From property analysis to tax strategy.
06 / THE PROCESS
From property review to tax implementation.
01
Feasibility
We review the property, acquisition or construction details and tax circumstances to determine whether a study appears economically worthwhile.
02
Documentation
We gather the information needed to understand the property and establish the appropriate basis for analysis.
03
Property Analysis
The property and its components are analyzed using an appropriate cost segregation methodology.
04
Classification
Qualifying components are evaluated and classified into the appropriate recovery periods based on applicable tax guidance.
05
Report
A detailed cost segregation report documents the methodology, classifications and resulting depreciation schedule.
06
Tax Implementation
The results can then be incorporated into the client’s tax reporting and broader planning strategy as appropriate.
07 / BUILT TO BE SUPPORTED
A tax strategy is only as strong as the support behind it.
A quality cost segregation study should clearly document the property, methodology, cost allocations, asset classifications and tax treatment supporting its conclusions.
Property information
Depreciable basis
Cost allocation methodology
Asset classifications
Applicable recovery periods
Supporting tax guidance
Depreciation schedules
Study methodology and assumptions
The goal isn’t aggressive classification. It’s a well-supported study based on the facts of the property.
08 / LOOK-BACK STUDIES
You may not be too late.
A cost segregation study may still be possible after a property has already been placed in service. Depending on the circumstances, eligible taxpayers may be able to change depreciation treatment without amending every prior-year return.
In certain situations, this may involve an accounting method change and a Section 481(a) adjustment, allowing eligible depreciation differences from prior years to be taken into account in the year of change.
Bought the property years ago and never completed a cost segregation study? It may still be worth evaluating.
Evaluate a Prior-Year Property →
09 / STRATEGY IN PRACTICE
See what the numbers can look like.
APEX CASE STUDY / APPROVED DATA PENDING
PROPERTY
Awaiting approved Apex case-study data.
DEPRECIABLE BASIS
Awaiting approved Apex case-study data.
ACCELERATED DEPRECIATION
Awaiting approved Apex case-study data.
ESTIMATED TAX IMPACT
Awaiting approved Apex case-study data.
Results vary based on the facts of the property and the taxpayer’s individual tax circumstances. This module is a temporary placeholder; no client results are represented.
10 / ESTIMATE THE OPPORTUNITY
Could cost segregation make sense for your property?
A few property details can help determine whether a full cost segregation analysis may be worth exploring.
ESTIMATOR PREVIEW / COMING SOON
Property Type
Select property type
Purchase / Construction Price
Enter amount
Estimated Land Value
Enter amount
Year Placed in Service
Enter year
Major Improvements
Describe improvements
This is a non-functional preview. Estimates are not available yet.
Preliminary estimates are for educational purposes only and are not tax advice or a substitute for a full cost segregation study.
11 / COMMON QUESTIONS
Before you order a study.
Draft answers below are for Apex’s review and approval before publication.
START WITH THE PROPERTY
Before you order a study, find out whether the numbers make sense.
Tell us about the property. We’ll help determine whether cost segregation is worth exploring and how it may fit into your broader tax strategy.