Frequently Asked Questions

In general, core structural components (e.g., foundations, structural framing, load-bearing walls, roofs, etc.) are typically not eligible to be reclassified into shorter-life personal property categories. Asset-specific classification can vary based on facts and engineering/tax analysis.

Here's a detailed explanation of audit/scrutiny considerations and best practices: https://www.recostseg.com/post/irs-audit-cost-segregation

Tenant improvements are build-outs or upgrades made to a leased space (often to customize it for a specific tenant). Depending on what the improvements are, they may be treated differently for depreciation, some components may be eligible for shorter recovery periods and/or bonus depreciation. More detail: https://www.recostseg.com/post/retail-cost-seg-tenant-improvements

Yes! As long as the property is placed in service by December 31, you get the full bonus depreciation deduction for that year. Bonus depreciation isn't prorated by how many months you owned or used the property the way some other deductions are, so a property placed in service in December gets the same percentage as one placed in service back in January.

Generally, yes. The bonus depreciation percentage is tied to the year the property was acquired/placed in service. Filing a Form 3115 in a later year typically doesn't change that original bonus rate.

Potentially, yes. If the improvements include items that qualify as personal property and/or land improvements (and otherwise meet the requirements). Eligibility depends on the nature of the assets and the placed-in-service timing.

Here's a detailed overview: https://www.recostseg.com/post/look-back-studies-10-years

If the property has already been placed in service, we can absolutely help with a look back study and support the Form 3115 process.