Cost segregation is a sophisticated tax planning strategy that allows commercial property owners to accelerate depreciation deductions by reclassifying specific building components. Instead of the standard 39-year depreciation life for non-residential real property, a cost segregation study identifies elements that can be depreciated over 5, 7, or 15 years.
Clopton Capital partners with ABGi, a global leader in tax incentive strategy, to provide engineering-based studies that improve your immediate cash flow and reduce current-year taxable income.
By front-loading your depreciation deductions into the early years of ownership, you significantly improve the Net Present Value (NPV) of your investment:
Improved Cash Flow: Immediate tax savings free up capital that can be reinvested into new acquisitions, property improvements, or operational debt reduction.
Catch-Up Depreciation: If you purchased or renovated a property in a prior year but did not perform a study, you may be able to claim “catch-up” deductions in the current year without filing amended returns.
Identification of Asset Components: Our studies break down qualifying elements such as specialized lighting, bespoke flooring, site improvements (pavement/fencing), and dedicated electrical systems.
Audit-Ready Documentation: Through our partnership with ABGi, we deliver comprehensive, engineering-based reports designed to align with IRS guidance and withstand professional scrutiny.
While cost segregation is a powerful tool, it is most effective for owners who meet the following criteria:
Recent Acquisitions/Construction: Owners who have bought, built, or significantly renovated a property with a cost basis typically exceeding £750,000 (or $1M).
Taxable Income: Investors who currently have a tax liability they wish to offset through accelerated non-cash expenses.
Hold Period: Owners planning to hold the asset for at least 3–5 years to fully realize the benefits of the accelerated schedule.
Property Types: Multifamily, Office, Retail, Industrial/Logistics, Hospitality, Self-Storage, and Mixed-Use assets.
We make the process of securing your tax benefits seamless and transparent:
Intake: You complete the ABGi Online Questionnaire.
Feasibility Analysis: ABGi performs a preliminary review to provide an estimate of the potential tax benefit range before you commit to a full study.
Data Collection: We gather blueprints, cost ledgers, and closing statements.
Engineering Site Visit: A specialized engineer reviews the physical asset to document all short-life components.
Final Report: You receive a detailed report to provide to your CPA for inclusion in your tax filings.
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No. It changes the timing of tax depreciation for accounting purposes; it does not impact the appraised market value of the real estate.
Yes. Cost segregation is an established tax planning tool that relies on IRS-defined depreciation rules. Using an engineering-based approach (like the one provided by ABGi) is the “gold standard” for compliance.
Yes, but the rules regarding “basis” are nuanced. It is essential to coordinate with your CPA to track the carryover basis from your relinquished property.
Absolutely. While we provide the engineering study and data, your CPA must advise on how the deductions apply to your specific tax situation and handle the actual filing.
You can still benefit. The IRS allows for “look-back” studies where you can claim all the depreciation you missed in previous years in one single “catch-up” deduction.
