Under standard IRS depreciation rules, residential rental property is written off straight-line over 27.5 years, while commercial real estate depreciates over 39 years. For real estate investors and syndicate operators seeking immediate tax relief and working capital, waiting nearly four decades to recapture capital expenditures is highly inefficient.
1. How Engineered Cost Segregation Studies Work
An engineering-based Cost Segregation Study dissects every structural and non-structural component of your real estate acquisition or renovation. By identifying structural elements that qualify as personal property or land improvements under MACRS guidelines, our specialists reclassify up to 30-40% of the building's purchase price into 5-year, 7-year, and 15-year recovery classes.
2. Bonus Depreciation & Real Estate Professional Status (REPS)
When combined with federal bonus depreciation rules, reclassified 5, 7, and 15-year assets can be expensed upfront in the year of acquisition. If you or your spouse qualify under Real Estate Professional Status (REPS) under IRC Section 469(c)(7), these massive paper depreciation losses can directly offset active high-income W-2 wages, consulting fees, or business profits!
3. Pairing with Section 1031 Like-Kind Exchanges
As you build equity and prepare to exit a property, our real estate advisory unit coordinates Cost Segregation recapture analysis with Section 1031 like-kind exchange replacement structuring�ensuring 100% of realized capital gains and depreciation recapture taxes are deferred as you scale into larger institutional properties.
Accelerate your real estate write-offs
Request a complimentary feasibility benefit estimate for your commercial or multifamily property.
