Examples · made-up property
Cost segregation for a small office building
Owners of small office buildings, including owner-occupied professional offices.
How it works for this kind of property
An office building is depreciated over 39 years. A study finds the parking lot, site lighting, landscaping and other site work (15-year), and the parts of the interior that serve the business rather than the building (5- and 7-year).
More on how it works
Office owners also get a check for section 179 on qualified real property: roofs, heating and cooling, fire protection and security systems added to a commercial building can be expensed by election, within the annual limit.
Which of the 8 studies fit
| Study | Example result |
|---|---|
| Faster depreciation (cost segregation) | Counted in this example |
| Catch-up on past years | Fits, not counted here |
| Inventory cost rules and accounting methods | Fits, not counted here |
| When home-sale income is taxed | Doesn't apply here |
| Energy-efficient home and building credits | Worth a question |
| Energy-efficient buildings and solar | Doesn't apply here |
| Research and hiring credits | Worth a question |
| Property and sales tax | Fits, not counted here |
What the engine found, for your CPA
Example: We checked 69 strategies: 11 fit, 6 need a question, 48 don't apply, and 4 are protection checks.
- Faster depreciation (cost segregation): 15-year site work (paving, lighting, fencing, landscaping); Bonus depreciation; Classification rules for this property type; Cost segregation on a building you bought; Section 179 on qualified real property
- Catch-up on past years: Accounting method changes (Form 3115)
- Inventory cost rules and accounting methods: Cash method for small businesses
- When home-sale income is taxed: No homes, condos or lots sold under contract.
- Energy-efficient home and building credits: Question: Utah state credits
- Energy-efficient buildings and solar: Bought an existing building: 179D is for energy-efficient lighting, HVAC/hot water or envelope property the owner installs (new or as a retrofit) with a certified energy model.
- Research and hiring credits: Question: Paid family leave credit (45S)
- Property and sales tax: Property tax appeal; Property tax review
Common questions
Who claims the tenant improvements?
Whoever paid for them. Improvements you paid for are part of your study; improvements a tenant paid for are the tenant's.
What is section 179 for real property?
An election to expense, up to an annual cap, certain improvements to a commercial building, such as a new roof or heating and cooling. Your CPA decides whether to use it or bonus depreciation.
How is the land split from the building?
From the county's land and building values or your closing papers. Until those are in, the estimate uses a usual land share and says so.
The rules behind it, for your CPA
- Pub. 946 (2025) Table B-1 asset class 00.3 Land Improvements
- 26 U.S.C. 168(b)(2)(A)
- Pub. 5653 Ch. 2 L(5)
- Notice 2026-11
- Treas. Reg. 1.168(k)-2(b)(3) original use / used property (5-calendar-year lookback)...
- Instructions for Form 4562 (2025)
- 26 U.S.C. 179(b)(1)-(3), (b)(6), (c), (d)(1),(2),(5),(8), (e)
- Rev. Proc. 2025-32 sec. 3.02 and sec. 4.24
- Rev. Proc. 2023-34
- Rev. Proc. 2019-08 secs. 2.01, 3.02
- Rev. Proc. 2015-13 (as modified)
- Rev. Proc. 2025-23, as modified by Rev. Proc. 2025-28 and Rev. Proc. 2026-32
Every number on this page is an example for a made-up property, computed by our engine. Not tax advice; your CPA reviews and files.