Cost Segregation

A tax strategy that accelerates depreciation deductions by reclassifying building components into shorter depreciation schedules (5, 7, or 15 years instead of 27.5). Particularly valuable for properties over $1M.

Key Points

Understanding cost segregation is essential for evaluating real estate investments
This concept helps investors compare opportunities objectively
Our Free Snapshot tool automatically calculates relevant metrics for any property

Related Terms

Depreciation

A tax deduction that allows investors to recover the cost of income-producing property over time. Residential rentals depreciate over 27.5 years. This paper loss can offset rental income without requiring actual cash outlay.

1031 Exchange

A tax-deferred exchange that allows investors to sell a property and reinvest the proceeds in a like-kind property without paying immediate capital gains taxes. Strict timelines apply: 45 days to identify, 180 days to close.