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Office Building Cost Segregation: Tenant Improvements & HVAC Reclassification
Built on a calibrated, data-driven modeling engine — not generic templates. Engineering-based cost segregation with tenant improvement analysis, delivered in days.
How a Dallas office investor accelerated $627,200 in year-one deductions — backed by data, delivered fast.
Property12,000 SF — Dallas, TX
Purchase Price$2,800,000
Year Built2016
Study TierCommercial ($1,495)
This investor elected our commercial cost segregation study. The study reclassified building components including tenant improvements, specialized HVAC zoning, and electrical systems — resulting in over $627,000 in first-year deductions beyond standard straight-line depreciation.
Total Accelerated (Year 1)
$627,200
beyond straight-line depreciation
$232,064
Est. Tax Impact (37%)
77x
ROI on Study Cost
28.0%
Basis Reclassified
3
TI Categories
What's in Your Study
Engineering-based analysis aligned with the IRS Cost Segregation Audit Techniques Guide.
Component-Level Analysis
Every building system classified by IRS asset life (5yr, 7yr, 15yr, 39yr)
MACRS Depreciation Schedules
Full schedules your CPA can use immediately — no additional formatting needed
Bonus Depreciation Modeling
100% bonus depreciation applied to accelerate first-year deductions
IRS ATG Compliance
Methodology aligned with the IRS Audit Techniques Guide for cost segregation
Separate schedule for tenant improvements, build-outs, and specialty installations
CPA-Ready PDF Report
Professional report delivered to your inbox in under 1 hour
Why Tenant Improvements Matter for Office Investors
Tenant improvements and build-outs are the biggest missed depreciation opportunity for office building owners.
Custom build-outs, specialty lighting, data cabling, raised floors, and security systems are 5 and 15-year depreciable property — not part of the 39-year building. Most standard depreciation schedules miss these entirely. We break out every tenant improvement asset.
With bonus depreciation, eligible TI components can be deducted in Year 1 — turning your build-out costs into immediate deductions.
Office buildings typically have $50K–$200K+ in tenant improvements. Without cost segregation, those deductions are spread over 39 years instead of taken in Year 1.
TI Categories We Identify
5yrSpecialty Electrical & Data Cabling
5yrSecurity & Access Control Systems
5yrDedicated HVAC Zones
5yrModular Partition Systems
15yrParking Lot & Site Improvements
15yrLandscaping & Exterior Lighting
15yrSignage & Wayfinding
Commercial Pricing. No Surprises.
Every study includes CPA-ready documentation prepared in accordance with IRS guidelines.
MOST POPULAR
Commercial Standard
$1,495/study
Properties under $2M
Engineering-based cost segregation study
5-year + 15-year reclassification
Tenant improvement depreciation analysis
100% bonus depreciation modeling
MACRS schedules + NPV analysis
CPA-ready PDF report
Email support
Commercial Premium
$2,995/study
Properties $2M–$5M
Everything in the $1,495 tier
Enhanced component detail for larger properties
Expanded depreciation schedules
100% bonus depreciation modeling
MACRS schedules + NPV analysis
CPA-ready PDF report
Email support
Frequently Asked Questions
Cost segregation is an IRS-recognized depreciation method that reclassifies portions of your commercial property into shorter depreciation categories (5, 7, and 15 years instead of 39). For office building owners, this means accelerating tens of thousands of dollars in deductions into the early years of ownership — reducing your taxable income significantly. Our commercial cost segregation guide covers the full process.
Tenant improvements (TIs) include custom build-outs, specialty electrical and data cabling, dedicated HVAC zones, security systems, and modular partition systems. These are 5-year and 15-year depreciable property — not part of the 39-year building structure. Without cost segregation, these shorter-life assets are depreciated over 39 years, costing you tens of thousands in missed early deductions.
Yes — if you own the building. Cost segregation applies to the building owner, regardless of whether the space is leased to tenants. In fact, tenant improvements made by the building owner are some of the most valuable assets to reclassify. If you are a tenant who has made leasehold improvements, consult your CPA about depreciation options for your specific situation.
Just the basics: property address, purchase price, square footage, and year built. Our intake form takes about 5 minutes. No site visit required. Photos and documents (closing statement, tax assessment) are optional but can improve accuracy.
Studies are delivered in under 1 hour as a CPA-ready PDF sent to your email. Your CPA can use it directly — no additional formatting needed.
Yes. If you didn't do cost segregation when you bought the property, you can file a Form 3115 (Change in Accounting Method) to catch up on missed depreciation — without amending prior returns. The full catch-up amount is taken in a single year.
Yes. Our methodology follows the IRS Cost Segregation Audit Techniques Guide. Each study includes component-level analysis, IRS asset class citations, and supporting engineering narratives. We recommend all clients work with their CPA when filing.
Office Building MACRS Breakdown: Tenant Improvements Are the Key Driver
Office buildings derive the bulk of their reclassification from tenant improvement (TI) build-outs: dropped ceilings, partition walls, specialty electrical, data cabling, and supplemental HVAC. Class A offices with recent TI spend reclassify more aggressively.
Structural frame, foundation, roof, curtain wall/exterior, elevators, central HVAC plant, main electrical switchgear, fire suppression mains, plumbing risers
Remainder
Office buildings with recent tenant build-outs, server rooms requiring dedicated cooling, and multi-story parking structures tend to reclassify at the higher end. Medical office buildings have an even higher reclassification profile due to specialized equipment — see our medical office page. Review our office benchmark data for typical reclassification percentages by building class and age.
See a Real Office Cost Segregation Result
Browse an actual depreciation breakdown for an office building.
