Cost Segregation


Cost Segregation

Cost Segregation Studies

What is Cost Segregation?

Cost Segregation is an engineering-based analysis of the components of a commercial property with the goal of identifying and segregating personal property from real property. The reclassification to personal property assets results in shorter depreciation lives for those assets and the tax benefits of accelerated depreciation and reduced tax liabilities.

Which Commercial Properties Qualify?

Here is a list of property types that qualify:

  • Assisted Living
  • Apartment Buildings
  • Automobile Dealerships
  • Bank/Financial Institution
  • Fitness/Health Clubs
  • Golf/Resorts Heavy
  • Manufacturing/Processing
  • Hospital/Medical Office Buildings
  • Hotels and Motels
  • Light Manufacturing
  • Office Buildings
  • Restaurants (single or multiple)
  • Self Storage Facilities
  • Strip or Regional Malls
  • Tenant Improvements Warehouses

Candidates for Cost Segregation include the following:

  • New Construction
  • Look Back
  • New Acquisition (Purchase Price Allocations)
  • Leasehold Improvements

Commercial property that is valued at a minimum of $1,500,000 (excluding land value) or a commercial property with leasehold improvements greater than $750,000 have enough potential benefits to warrant a study.

What are the Benefits?

  • Time Value of Money
  • Dramatic reduction in taxable income
  • Increased cash flow for investment opportunities and business expansion
  • Property tax savings
  • Insurance savings

Sample Case Studies

Facility Costs 1st Year Tax Savings 1st Year Tax %Cap Costs 1st 5 Years Tax Savings 1st 5 Years %Cap Costs
Apartment $6.7M $345,000 5.1% $846,000 12.6%
Retail $1.5M $96,000 6.4% $165,000 11.0%
Restaurant $2.4M $135,000 5.6% $322,000 13.4%
Warehouses $9.4M $365,000 3.9% $783,000 8.3%


For more information, use our Contact Us Form or to speak with a Tax Credit Specialist please call 866.927.5993


"Much to our pleasure, Paradigm’s engineers were able to identify substantial incremental opportunities which resulted in significant refunds and dollar-for-dollar reductions to our tax liabilities."
John Ehrhard
Buckeye International, Inc.
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