Cost Segregation  ·  Functional Allocation

Your building depreciates by what each piece does.

The shell defaults to 39 years, but 20 to 40 percent of a building’s cost often belongs in 5, 7, or 15. Feasibility comes first, in writing, before you commission anything.

01 · THE PRINCIPLE

Function decides. Not the wire.

Same electrical run: general lighting = 39 years. Dedicated process equipment = 5 years. We document which is which, from drawings, invoices, and the engineering analysis of your facility.

ComponentServing the buildingServing the work process
Electrical distributionGeneral service & outlets 39-yrDedicated circuits to workstations & equipment 5/7-yr
LightingGeneral illumination 39-yrTask & inspection lighting specified to the process 5/7-yr
Data & low-voltage cablingBuilding systems wiring 39-yrCabling serving process equipment & operator stations 5-yr
HVACOccupant comfort 39-yrZone conditioning required by equipment or process allocable
Partitions & finishesStructural walls 39-yrModular partitions and process-driven millwork 5/7-yr
Site improvementsParking, walkways, landscaping 15-yr

Illustrative only. Nothing here is a promise for your building. Classification follows the engineering analysis of your facility and current IRS guidance.

02 · WHEN IT'S WORTH A LOOK

Feasibility costs a phone call. The study is optional.

You built, bought, or substantially renovated commercial or rental property in recent years, or you're about to.

The building serves a process: production, food service, medical, logistics, a lab. Not just desks and drywall.

Construction-in-progress or a purchase is sitting on the balance sheet depreciating at a flat 39 years.

You missed it in a prior year. Lookbacks can often capture the difference without amending, when the rules allow.

03 · THE PROCESS

Four steps. Written answer at step one.

01

Feasibility

Send the property basics: cost, type, placed-in-service date. You get a written "worth it or not" before commissioning anything.The off-ramp is free to take

02

Engineering analysis

Each allocation tied to function: what the circuit, duct, or partition actually serves. Drawings and invoices are the evidence.

03

Study & schedules

Asset-by-asset allocation with functional-use evidence, ready for your preparer.

04

Implementation

File it. Lookbacks when allowed. Your preparer or ours.

Start with feasibility.

Send the property basics (cost, type, placed-in-service date) and we'll tell you in writing whether a study is worth commissioning.

Request a Feasibility Review