Cost Segregation – A Useful Tool for CPAs A common depreciation scheme for a real estate purchase is to incorporate the entire cost of the building into a 39-year straight-line depreciation schedule. The cost segregation approach to depreciation provides a money-saving alternative that can lower tax bills and increase cash flow. Under cost segregation, the
Cost Segregation Basics Cost segregation is an alternate method of depreciation in which pieces of a property are classified into separate categories for tax purposes. Instead of applying a typical 39-year depreciation cycle on the entire property and its contents, Cost Segregation allows some asset classes to be depreciated faster, resulting in near-term tax savings.