I t generally takes 39 years—nearly half a century—to completely depreciate the cost of a business building. By that time, you or your business may no longer be around to celebrate. But you may be able to pick up the pace.

Strategy: Commission a cost segregation study by experts. If you qualify, you can potentially rely on the study to write off certain building components in just five or seven years, without applying to the IRS for an accounting method change. That’s not to say that the IRS will give you free rein to write off building components over a short period of time. In fact, the nation’s tax-collection agency often challenges cost segregation studies used by taxpayers to justify faster write-offs for buildings. However, you may still “pass inspection” based on the latest IRS guidance.

Link: https://www.irs.gov/

Link: https://www.irs.gov/pub/irs-pdf/p5653.pdf

Here’s the whole story: Under the Modified Accelerated Cost Recovery System (MACRS), the general depreciation period for a commercial building is 39 years. On the other hand, personal property can be written off over just five years if the property has a useful life between four to 10 years. A seven-year period can be used to write off property with a useful life between 11 and 15 years. As a general rule, “personal property” is defined in the regulations as tangible depreciable property (other than buildings and their structural components) used in special industries, such as transportation and communications, and several other specialized types of property. Key point: Several court decisions have held that parts of a commercial building can be treated as personal property if they relate only to equipment used in a business located in the building, instead of for general maintenance or operation of the building. This more favorable depreciation treatment can apply to components such as electrical systems, plumbing systems in restaurant kitchens, and removable carpeting. Because the write-off periods for components often depend on the use of the building, taxpayers often commission tax pros and other experts to put together cost segregation studies with breakdowns of the write-off periods for various components. After years of uncertainty, the IRS finally issued a lengthy Audit Techniques Guide (ATG) to help its agents determine when a cost segregation study is up to snuff. The IRS has just updated the ATG for 2025. Good news: The IRS isn’t trying to hide anything. Both taxpayers and their cost segregation experts can read through the ATG at

www.irs. gov/pub/irs-pdf/p5653.pdf. Among other things, the guidance explains why cost segregation studies are performed, how they are prepared and what agents should review. If anything, the ATG may help you nail down faster write-offs when they are warranted. But remember that this can’t be cited as authority in a court case. Also, be forewarned: The updated ATG is 348 pages long! To be on the safe side, enlist the services of a tax pro if you think you could benefit from a cost segregation study of building assets. The tax pro can tell you where you’ve gone wrong in the past and how to change things in the future.

Tip: When it makes sense, you could potentially reclassify certain components and file amended returns for affected