From closing
The transaction
The closing statement and the purchase documents that set the basis. Prior returns and any existing depreciation schedule help.
Cost Segregation for New Purchases
You bought a building for one number. Depreciation needs that number broken into land, structure, land improvements and personal property, and the default approach leaves most of it in the longest life.
One number becomes several.
When a commercial property is acquired, the purchase price has to be allocated across every asset that came with it. Without an engineering study that allocation is usually a two-line entry: land, and everything else. Everything else then depreciates over the longest life, including paving that will be resurfaced and finishes that will be replaced long before the structure.
Purchase price allocationThe same building, both ways
Without a study
Landnot depreciable
Building and everything in it27.5 or 39-year
ResultOne long-life line
With an engineered study
Landnot depreciable
Structure27.5 or 39-year
Land improvements15-year
Equipment7-year
Personal property5-year
ResultShort-life lines bonus can reach
Land is carved out first, on a supportable basis. The purchase price does not change; where it sits on the schedule does.
A study reconstructs what you actually bought. Engineering reviews the property on a virtual or onsite tour, inventories the qualifying components, prices them, and documents each classification. The residual becomes the structure. The result is a defensible allocation rather than an assumption.
Documents you already have
An acquisition study is reconstructed from the deal documents and the property itself. Everything comes in through a secure upload, and NDAs are available for sensitive deals.
From the property
What is actually there
Plans if they exist, photos, and the virtual or onsite tour where the components are identified and photographed.
From your CPA
How it will be used
The placed-in-service date, the entity that holds title and the filing calendar the schedule has to meet.
Before you close, the year you close, or later
The study is most valuable on the first return that includes the property. It is not lost if that return has already been filed.
Before closing
A pre-acquisition estimate puts the expected depreciation into your underwriting.
Year of acquisition
The allocation lands on the first return. For property acquired after January 19, 2025, the 5-, 7- and 15-year lines are eligible for 100% bonus depreciation.
A prior year
A look-back study claims the missed depreciation through Form 3115. No amended returns.
A portfolio
Multiple acquisitions run as a portfolio program: every property studied the same way, with one coordinator.
New purchase questions
Still have a question? Ask Engineering.
When should we commission the study?
Ideally in the year of acquisition, so the deduction lands on the first return that includes the property. If that return has already been filed, nothing is lost: a look-back study claims the missed depreciation through Form 3115 without amending prior returns.
Does the appraisal allocation work instead?
An appraisal allocates value for lending purposes, typically between land and improvements. It is not a component-level engineering analysis, and it does not identify the 5-, 7- and 15-year property a study is built to find.
Can we see the benefit before we close?
Yes. A pre-acquisition estimate gives you an Engineering-prepared view of the depreciation a study is expected to accelerate, so it can go into your underwriting.
What if we bought several properties?
Our portfolio and fund programs study every property the same way, with one coordinator for the whole program.
Get a Commercial Savings Estimate
Fixed-fee proposal in 24 to 48 hours.
- Prepared by Engineering
- Lifetime audit defense
- NDAs available
info@senecacostseg.com
1210 Jackson St SE, Suite 2, Albany, OR 97322
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