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1. Commercial Property Owners – Think of the components like HVAC systems, lighting fixtures, interior finishes, etc., which could potentially be written off 100% if their useful lives are below 20 years. Commercial properties tend to have more components than a residential property and are usually valued higher. Various different commercial properties can qualify, such as office buildings, retail stores, warehouses, manufacturing facilities, hotels, restaurants, and apartment complexes, to name a few. Many of these things are called “leasehold improvements” as a catch-all term if the property they are installed in is rented out to tenants, and are expressly allowed in the IRS tax code for accelerated depreciation. If those improvements are done to qualified property (interior, non-structural) in nonresidential buildings after the purchase of the building, then such improvements (“QIP”) are eligible for 15-year depreciation (instead of the building’s 39-year life). They also qualify for bonus depreciation and Section 179 depreciation expense. One underlooked area is also “partial asset dispositions,” or “PADs,” so named for the costs undertaken by commercial property owners for the removal and disposal of items during a major renovation or rehab. If the remaining basis of those assets is not identified and written off, they are simply LOST. Cost segregation studies identify those very easily.
    
2. Residential Property Owners – Multifamily properties tend to have quite a bit of components and are valued higher than a typical single-family home. But you never know unless you get it valued. So this group is not necessarily excluded. Short-term rentals like Airbnb & VRBO-listed property owners are included in this group and can benefit from reallocating certain assets to shorter depreciation lives, ESPECIALLY if they have purchased or renovated the property in the last several years, have substantial revenue, and plan to hold their properties long enough to benefit from the accelerated depreciation but may sell before full depreciation recapture.
    
3. Real Estate Developers – Developers can INCLUDE cost segregation into the planning process, which would allow them to depreciate the PROPER higher (accelerated) amounts for all the necessary components right from the beginning of their projects. With proper higher depreciation numbers, income taxes are lower from the beginning, thereby allowing the developer to forecast their true after-tax profits for investors and redeploy that cash responsibly to existing or new projects. Built-to-rent communities would be an example of a development where design and amenities (parks, pools, fitness centers, common spaces) can be included as part of the components for accelerated depreciation.
    
4. Commercial Real Estate Brokers – Providing a CSS option to clients makes a broker stand out more, differentiating their services and thereby allowing more referrals and more business. Further, a building which may be on the borderline of a good investment, with a CSS, can turn into a profitable one, thereby also leading to more transactions. This is because more depreciation reduces taxable income and improves Net Operating Income (NOI). A higher NOI leads to a higher appraised value for buildings using the “income approach,” and thus higher marketed sale values for clients. In the end, closing more deals and winning the client’s confidence and trust is part of a good long-term relationship with clients and a successful real estate practice. That’s why having a good resource for CSS is so invaluable.
    
5. REITs (Real Estate Investment Trusts) – Similar to real estate developers, REIT operators can also take advantage of accelerated depreciation from the revalued components, thereby increasing distributions and return on equity for their investors. Higher profit means higher yield and distributions of those profits for investors.
    
6. Special-Purpose Properties – Hospitals, RV park owners, senior housing like nursing homes and assisted living facilities, self-storage, and other special-purpose properties (data centers, movie theaters, water treatment plants, etc.). Eg: RV park owners have components known as site preparation and grading (earthwork and drainage), amenities (clubhouses, laundry rooms, pools, or playgrounds), paving (internal roads and individual pads), and permits and zoning fees. Self-storage sites have costs like permits and zoning, security and technology, raw construction costs, gate access systems, signage, and outdoor lighting. Understanding the distinction between capital improvements and repair expenses is what reduces the chances of audit while maximizing profit due to proper depreciation and expense write-offs. There’s always more than just the physical structure to add for accelerated depreciation!

SIDEBAR: Section 179D allows tax benefits for energy-efficient HVAC, lighting, and building envelope upgrades. Read about that here (good until June 30th, 2026 only): https://tax.thomsonreuters.com/news/sec-179d-scores-wins-in-congress-tax-court-tax-pro-says/