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Case Study: Using Cost Segregation Studies to Accelerate Depreciation Expense for Real Estate Investment Group

Posted by Randy Eickhoff on Jan 11, 2024 6:05:09 PM
Randy Eickhoff
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Client Overview:

The client, a real estate investment group specializing in commercial real estate, partnered with Acena Consulting to optimize its tax strategy. The firm sought to expedite depreciation expenses for their acquired properties, aiming to offset potential gains tax for their investors.


The real estate investment group needed to mitigate the potential taxable income on commercial real estate properties purchased by their investors. The goal was to expedite depreciation expenses to offset tax liability, ensuring optimal returns for their investors. 


Acena Consulting's strategic approach included comprehensive cost segregation studies across all properties acquired by the real estate investment group. These studies involved a thorough breakdown of assets within each property to identify components eligible for accelerated depreciation. The process included: 

Property Analysis
Acena Consulting assessed each acquired property, analyzing various components such as building structures, land improvements, and building interiors.

Asset Classification
Detailed studies were conducted to classify assets, determining those qualified for accelerated depreciation under tax guidelines.

Reporting and Documentation
Acena Consulting provided detailed reports outlining segregated costs and identified assets, ensuring compliance with IRS regulations.


Acena Consulting's cost segregation studies yielded several significant outcomes:

  • Accelerated Depreciation: Typically, the studies reclassified 20%-35% of the building basis into personal property, accelerating the depreciation and reducing taxable income.

  • Tax Mitigation: The expedited depreciation significantly offsets potential taxable income and tax liabilities for the real estate investment group’s investors.

  • Enhanced Returns: By optimizing the tax strategy, investors experienced improved returns on their commercial real estate investments.


Acena Consulting's expertise in conducting cost segregation studies provided the real estate investment group with a tailored solution to accelerate depreciation expenses. This strategic approach not only alleviated potential tax burdens but also enhanced returns on commercial real estate investments for investors.

By leveraging Acena Consulting's specialized services, the real estate investment group successfully navigated the complexities of tax optimization in the real estate investment landscape, reinforcing their commitment to delivering superior value to stakeholders.

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Topics: cost segregation, accelerated depreciation

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