Commercial · 39-year or 27.5-year property
Cost Segregation for Mixed-Use Properties
Mixed-use is the property type where the study has to answer a threshold question first: which part of this building is residential, and which part is not.
The 80% gross rental income test
Whether a building is residential rental property with a 27.5-year life or nonresidential real property with a 39-year life turns on whether 80% or more of gross rental income comes from dwelling units. Get that wrong and every downstream number is wrong. In practice, mixed-use studies allocate the structure between the residential and commercial portions and apply the correct life to each, then reclassify short-life components within both.
Two fit-out standards in one building
Ground-floor retail or restaurant space reclassifies at commercial rates and generates qualified improvement property when re-tenanted. Residential floors above reclassify on the multifamily profile — appliances, cabinetry, flooring, in-unit finishes. Shared elements such as elevators, parking structures, amenity decks and site work must be allocated between the two, which is the part that separates an engineering-based study from a spreadsheet.
Component takeoff
What we pull out of mixed-use properties
Grouped by the recovery period each component lands on. This is representative, not exhaustive — the takeoff on your building will be longer.
- 5Residential unit appliances, cabinetry and flooring
- 5Commercial tenant finishes, decorative lighting and millwork
- 5Dedicated power serving restaurant or retail equipment
- 5Data, security, access control and package-room systems
- 5Amenity build-out — fitness, lounge, co-working, roof deck fixtures
- 5Signage for both residential and commercial tenants
- 7Common-area and amenity furniture
- 7Management office equipment
- 15Surface parking, drives, alleys and loading areas
- 15Streetscape, sidewalks, planters and site walls
- 15Site and facade lighting and monument signage
- 15Landscaping, irrigation, courtyards and podium planting
- 15Storm drainage and site utilities
- 15Qualified improvement property in the commercial portion
- 39Structure, podium, envelope and roof — allocated between uses
- 39Elevators, stairs, corridors and life-safety systems
- 39Central mechanical plant and domestic water
Questions
How much of the basis usually reclassifies on this property type?
Studies on mixed-use properties typically move 18% to 30% of depreciable basis into 5, 7 and 15-year classes. That is a planning range from comparable buildings, not a promise — the number that ends up on your return comes from the actual takeoff.
What documents do you need?
The closing statement, the current depreciation schedule and the property address at minimum. Construction records, drawings, pay applications and change orders make the work more precise and often cheaper.
I bought this several years ago. Is it too late?
No. As long as you still own it and placed it in service after 1986, a look-back study captures every missed deduction and brings it forward on the current return via Form 3115. No amended returns.
Related
Other property types
The study is one piece. We can handle the rest of the return.
Deprecio is part of the Shurek Accounting & Tax family of brands. If you want the study and the tax work under one roof — the return, the Form 3115, entity structure, quarterly estimates, multi-state filings — that is a single engagement, not a hand-off between two firms.
No-cost feasibility review
Find out what your building is hiding.
A feasibility review is free and takes about twenty minutes. Bring the closing statement and the depreciation schedule; we will tell you plainly whether a study pays for itself.