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Cost Segregation Strategy Delivers Greater Real Estate Tax Savings

 



Many property owners use straight-line depreciation without realizing how much potential Real Estate Tax Savings they’re missing. With traditional depreciation, deductions are spread evenly across 27.5 years (residential) or 39 years (commercial). This slow pace limits cash flow, restricts reinvestment opportunities, and delays the financial advantages investors could be earning today. In comparison, a cost segregation study accelerates those benefits—leading to substantially stronger cash flow and higher first-year deductions through accelerated depreciation and bonus depreciation where applicable.

Cost segregation breaks a building into faster-depreciating categories, including land improvements, electrical systems, flooring, cabinetry, parking lots, HVAC components, and more. These items qualify for depreciation over 5, 7, or 15 years instead of 27.5 or 39. The result? Investors often see first-year deductions ranging from $100K to over $500K, depending on property type, size, and eligibility. This targeted asset reclassification is the core strength of cost segregation analysis and one of the most effective ways to reduce tax liability on investment properties.

This comparison becomes even more valuable for investors planning renovations, expansions, or new acquisitions. The cash unlocked through accelerated depreciation can be redirected toward property improvements, capital upgrades, or additional real estate purchases—fueling faster portfolio growth. For many, this strategy becomes a compounding financial advantage that pays off year after year.

O’Connor’s Cost Segregation Services are conducted by experienced engineers who follow IRS-approved methodologies to ensure precision, compliance, and audit-readiness. Unlike traditional depreciation estimates made by CPAs or basic accounting teams, an engineering-based study reviews every component of the property, identifying all assets eligible for accelerated depreciation. This allows investors to achieve maximum allowable tax benefits across their cost segregation real estate portfolio.

For property owners seeking smarter tax planning and improved cash flow, cost segregation remains one of the most valuable—and underutilized—strategies available today.


To know more about us, visit https://www.poconnor.com/cost-segregation/

 

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