Highlights
In 2024, an experienced investment group built a 172-unit apartment complex in the Treasure Coast, Florida as part of their growing real estate portfolio. Under straight-line depreciation, they would have only written off $1,658,182 in year one.
By applying 60% Bonus Depreciation using IRS-recognized Approach #1—Detailed Engineering from Actual Cost Records—the client reclassified $12,751,444 into shorter-life assets, unlocking $9,720,168 in first-year deductions and accelerating 28% of the property’s value right out of the gate.
Statistics
$45,600,000
Cost Basis
$1,658,182
First-Year Depreciation (Straight-Line)
$9,720,168
First-Year Depreciation (Cost Seg + 60% Bonus)
$12,751,444
Total Accelerated Depreciation
28%
Depreciation Accelerated
Approach
Cost Seg America used the IRS’s gold-standard Approach 1 — the Detailed Engineering from Actual Cost Records outlined in the IRS Cost Segregation Audit Technique Guide — to accurately classify assets and maximize allowable depreciation.
Breakdown of Reclassified Assets:
- Comprehensive Data Collection – Our team gathers all relevant documents, including settlement statements, site plans, and architectural drawings, to create a complete asset profile.
- On-Site Inspection – Our analysts conduct a detailed inspection to identify every critical component of the property.
- Precise Asset Reclassification – Our team categorizes property components according to IRS guideline, ensuring compliance while accelerating depreciation schedules.
- Optimized Depreciation Application – Our team's analysts apply MACRS to maximize tax deferrals and enhance cash flow.
- Seamless CPA Collaboration – Our cost segregation report is delivered audit-ready, ensuring smooth integration into tax filings with full IRS defense.
💡 How This Property Was Reclassified
🟦 27.5-Year Property: $32,848,556 (72%)
🟩 15-Year Property: $2,389,254 (5.2%)
🟨 7-Year Property: $85,464 (0.2%)
🟥 5-Year Property: $10,276,726 (22.6%)
“Over 28% of the building’s value was shifted into short-life assets eligible for accelerated depreciation—unlocking faster cash flow!”
Breakdown of Reclassified Assets
27.5-Year Property (Structure)
Foundation and framing • Roof and load-bearing walls • Plumbing infrastructure • HVAC ductwork and air handler housing • Insulation within walls and ceilings
15-Year Property (Land Improvements)
• Driveway and parking area • Walkways and sidewalks • Landscaping and irrigation systems • Concrete patios or decks • Exterior lighting and fencing
7-Year Property
Network cabling & data system ◦ Specialized business equipment connections
5-Year Property
LED lighting systems ◦ Decorative millwork & cabinetry ◦ Carpet and interior finishes
Summary
By applying the IRS-recognized Detailed Engineering Approach from Actual Cost Records (Approach #1), we helped our client accelerate 28% of a $45.6 million apartment complex—unlocking over $9.72 million in first-year depreciation. That’s more than 5.8 times what straight-line depreciation would have allowed.
This was not just a win on paper—it is a reflection of what matters most to us: lasting relationships, full transparency, and results that move the needle. Our clients count on us because we do not just deliver audit-ready studies—we deliver peace of mind and long-term value.
At Cost Seg America, we are here to help you protect what you have built, maximize what is possible, and move forward with confidence.
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