A commercial property may contain hundreds of individual components, and those components do not always serve the same purpose. When owners look at depreciation, understanding these differences can be useful. One question often comes first: what is cost segregation? It is an approach that examines the components of a property and separates qualifying assets into appropriate depreciation categories.
The idea becomes easier to understand through a simple example. A commercial building may include its main structure, flooring, lighting, dedicated electrical systems, plumbing, equipment, exterior improvements, and other property components. While these items are part of the same real estate project, they may have different depreciation characteristics. A cost segregation analysis examines those components individually.
If someone asks you to define cost segregation... https://www.whatiscostsegregation.com/
