What is a cost segregation study and is it right for my business?

A cost segregation study is an IRS-approved tax strategy that allows businesses and real estate owners who have constructed, purchased, or significantly renovated commercial property to accelerate depreciation deductions by reclassifying certain building components into shorter depreciation categories — typically five, seven, or fifteen years rather than the standard 39-year depreciation period for commercial real estate. The result is significantly larger depreciation deductions in the early years of ownership, reducing taxable income and improving cash flow. A cost segregation study is most beneficial for businesses that own or have recently acquired commercial real estate, have made significant leasehold improvements, or have constructed new facilities. Yeo & Yeo’s tax professionals evaluate whether a cost segregation study makes sense for your specific situation and coordinate the analysis as part of your broader tax strategy.