The process of identifying and reclassifying the personal or commercial property assets to reduce the depreciation time for increased cash flow is known as cost segregation analysis. The main goal is to identify construction-related costs that can be shortened over five, seven, or fifteen years. If the property is non-residential, then the duration is 39 years. Personal property are the assets found inside the building, like electrical fixtures, plumbing, etc. Land improvements are made on the outside, and these assets are not related to the maintenance and smooth functioning of the building. With cost segregation, you split these items individually, and this splitting allows you to get an accelerated depreciation timeline. This article will clarify the importance of getting cost segregation, how it works, who performs it, and some common misconceptions about segregation.
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