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Tax strategy · IRC § 168(k) · Cost segregation
A building is not one asset. A cost segregation study separates the parts that depreciate over 5, 7 and 15 years from the 27.5- or 39-year shell, and since 2025 those shorter-life parts can be written off 100% in the first year. We plan, document and defend these deductions.
Serving United States, Virginia, Washington, DC, Maryland.
What we handle
The 2025 tax law made 100% bonus depreciation permanent for qualifying property acquired and placed in service after January 19, 2025. Qualifying property generally has a recovery period of 20 years or less, which includes furniture, equipment, dedicated electrical and plumbing, carpeting, land improvements such as parking lots and landscaping, and qualified improvement property (interior improvements to nonresidential buildings, which is 15-year property under section 168(e)(6)).
A cost segregation study, prepared by engineers and tax advisors, assigns the purchase or construction cost of a building to these categories. Buildings bought or built in earlier years can still benefit: a change in accounting method on Form 3115 claims the missed depreciation in the current year without amending prior returns. When components are later replaced, the partial disposition rules let you write off the remaining basis of what was removed.
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The foundation of cost segregation: certain building components that serve equipment or the business, rather than the building's operation, can be depreciated as shorter-life personal property.
An apartment complex owner split a $10.25 million purchase into more than 1,000 components. The court reclassified most of them back to the building as structural components, sustaining most of the IRS's position.
A buyer that agreed to an allocation in its purchase agreement could not later use a cost segregation study to reallocate the price differently.
Studies that rely on engineering detail and component-by-component legal analysis survive; aggressive classifications do not.
Our approach
Check acquisition date, cost, use and passive loss position to see if a study pays.
Engineering review, site visit and component-level cost allocation.
Depreciation schedules, Form 3115 where needed, and state adjustments.
Support classifications and documentation if the IRS examines.
Questions
If your question isn't here, call (703) 880-8412 and you'll reach a person.
Yes. The 2025 tax law made it permanent for qualifying property acquired and placed in service after January 19, 2025. Property acquired under a binding contract before that date follows the earlier phase-down.
Usually yes. A change in accounting method on Form 3115 lets you claim the depreciation you missed as a single adjustment in the current year, without amending old returns. Bonus depreciation depends on when the property was acquired.
Yes. Used property qualifies if you did not use it before and did not buy it from a related party.
Fees depend on the size and complexity of the building. Studies generally make sense for buildings with depreciable cost in the high six figures or more, when the owner can actually use the deductions.
Faster depreciation is recaptured on sale, much of it at ordinary rates for personal property, and the deductions may be limited by the passive activity, at-risk and excess business loss rules.
No. Virginia generally does not conform to federal bonus depreciation, so a separate Virginia depreciation schedule is required and the state benefit is spread over time.
Latest updates
Authorized representatives can now make balance-due, amended return, extension, proposed assessment and federal tax deposit payments for business clients online. Appropriate authorization for the client and tax matter is required.
Source: IRS (IR-2026-134)
For 2027 the joint-return standard deduction rises to $33,200, the estate tax basic exclusion to $15,480,000, the annual gift exclusion to $20,000 and the Section 179 expensing limit to $2,640,000. Our advisors recommend revisiting year-end gifting and equipment purchase plans with these figures in mind.
Source: IRS (IR-2026-133)
All 6,576 nominated census tracts, including 2,594 rural tracts eligible for enhanced benefits, become Opportunity Zones on January 1, 2027 for ten years. Investors with capital gains should review the new map before committing funds.
Source: IRS (IR-2026-132)
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