Typically, it takes 39 years—to fully depreciate a commercial building. But there’s a strategy that can help you write off certain building components much faster.
The Strategy: Commission a cost segregation study performed by qualified experts. If eligible, you may be able to depreciate parts of your building over five or seven years—without applying for an accounting method change with the IRS.
Important: The IRS closely monitors cost segregation studies, and not all claims for accelerated write-offs are automatically approved. However, by following current IRS guidance, many taxpayers successfully “pass inspection.”
How It Works:
- Under the Modified Accelerated Cost Recovery System (MACRS), a commercial building generally depreciates over 39 years.
- Personal property can be depreciated over five years if its useful life is 4–10 years, or seven years for property with a useful life of 11–15 years.
- “Personal property” includes tangible, depreciable property (excluding buildings and structural components) used in specialized industries.
Examples of Faster Write-Off Components:
- Electrical systems
- Plumbing systems in restaurant kitchens
- Removable carpeting
These are eligible if they relate only to business operations rather than general building maintenance.
When done correctly, this strategy can significantly increase your tax savings and improve cash flow.
Plan strategically for current and future tax years.
Important note: Every taxpayer’s tax situation is different. This message is for general informational purposes only and not individual tax advice. Please consult directly with our licensed tax professional for guidance tailored to your unique situation.
