Professional Office Cost Segregation Case Study

Study Overview

In this case study done for tax year 2026, the office building had a total cost of $8,320,000, not including land. Through cost segregation analysis, the owner was able to reclassify 12% of the total costs to either 5 or 7 year property and 15% of the total costs to 15 year property.

This resulted in a Net Present Value After Tax Benefit of over $457,000. The additional depreciation in the first year of the study was approximately $2,191,000.

Qualified Property

Office buildings vary in the level of qualified property they are made up of. However, to some extent all office buildings will have a certain level of qualified millwork, floor and wall coverings, dedicated electrical for office equipment (wiring, conduit & receptacles), dedicated plumbing work for employee break areas, land improvements outside such as storm water systems, certain excavation, asphalt, concrete curbs and sidewalks and landscaping & irrigation. Some office buildings will have extensive decorative millwork, additional cabinetry and countertops, decorative lighting and the related electrical work to this lighting, supplementary HVAC systems for computer rooms and raised flooring.