Real estate depreciation can involve more detail than simply applying one schedule to an entire building. Different components may have different functions, uses, and depreciation classifications. This is where many property owners begin asking, what is cost segregation, and why would an analysis examine individual parts of a property rather than treating the entire building as one asset?
Cost segregation is an approach that separates qualifying components of a building into appropriate depreciation categories. A property can contain structural elements as well as items such as specialized electrical systems, flooring, lighting, plumbing, equipment, landscaping, and other improvements. The purpose of examining these components is to identify the depreciation treatment that may apply to each category.
To define cost segregation more clearly, think of it as a property-specific analysis of building-related costs. https://www.whatiscostsegregation.com/
