► Cost Segregation allows certain special use components of buildings to be depreciated over five-, seven- and 15-year lives rather than the standard 39-year life for commercial properties and 27-year life for residential properties.

The Energy Policy Act of 2005 (EPAct 2005):

  • Addresses S. energy policy, providing tax incentives for a number of solar and energy efficiency measures – up to $1.80/sq. foot for tax deductions on energy efficiency; HCAV, lighting, and building envelope, .60 for each or $1.80 for all.
  • Benefits to real estate owners
    • Tremendous tax benefits from accelerated depreciation deductions
    • Easier write-offs when an asset becomes obsolete, broken or destroyed
    • Can be used when constructing, purchasing or when already owned
    • Lower local realty-transfer taxes.

Depreciation strategies for commercial properties identify real property assets and reclassify them for faster depreciation for commercial property owners. Also, there are measurable advantages and that increase ROI from Solar and Energy Efficiency opportunities to increase tenant retention while improving operating expenses and by reducing annual operating expenditures.

ValuCorp provides proven, value-added methodologies for Business Owners and members of their financial advisory team including accountants, lawyers, financial advisors and bankers.  Collaborative techniques ensure clients that their unique issues are being professionally addressed.

  • Provides real estate purchasers with tremendous tax benefits from accelerated depreciation deductions and easier write-offs when an asset becomes obsolete, broken or destroyed.
  •  May be used:
    • When constructing a building
    • Buying a building
    • If a structure was acquired several years earlier, or years after disposing of a building so long as the year of disposition still is open under the statute of limitations
  • By combining a recommended engineering report with a financial analysis, assets are segregated into four categories:
    • Personal property
    • Land improvements
    • Building components
    • Land


  • Distinguishes between tangible personal property and a building’s structural components. Use validated criteria in making a factual determination of whether property is inherently permanent and therefore excluded from the definition of tangible personal property.



Implement these savings based on the present value of cash benefits by segregating:

  • Carpeting
  • Doors
  • Electrical conduit, floor boxes and power boxes
  • Electrical distribution systems – primary and secondary
  • Plumbing – special
  • Wiring and related property items: laboratory, maintenance shop, to television equipment, to internal communications, and other
  • Vinyl wall and floor coverings
  • Water piping and steam lines
  • Other personal property

What to consider:

Seek a combination of an engineering report with financial analysis…

  • Advantages include the:
  • Present value of tax savings based on front-loaded depreciation deductions
  • Write-offs of building components that need replacement
  • Lower local realty-transfer taxes


  • Disadvantages include the:
  • Cost of the engineering study and financial analysis
  • The triggering of depreciation recapture
  • The need to not be too aggressive in the allocations