The Tax Cuts and Jobs Act Gives Cost Segregation Studies New Life

Document Type



cost segregation; bonus depreciation; Tax Cuts and Jobs Act, Section 179; immediate expensing; tax benefits

Identifier Data


Civic Research Institute

Publication Source

Taxation of Investments, 37(1), 47-59(13)


A cost segregation study allows taxpayers to recover certain costs ordinarily classified as real property over shorter cost recovery periods applicable to personal property. By recovering costs faster for tax purposes, taxpayers can accelerate tax benefits and enhance cash flows. The Tax Cuts and Jobs Act of 2017 has increased the benefits of a cost segregation study. However, the IRS will scrutinize aggressive cost reclassifications. Those interested in performing cost segregation studies should be knowledgeable about the advantages and pitfalls of this tax-saving, cash-flow generating tool under the new tax law.