Commercial · 39-year property
Cost Segregation for Office Buildings
Office buildings look monolithic and reclassify better than owners expect. The structure is genuinely 39-year property, but the tenant-facing layer — cabling, finishes, dedicated power, millwork, signage — and everything outside the walls is not.
Where the value sits in an office building
The shell of an office building is the least interesting part of a cost segregation study. Foundation, structural frame, curtain wall, roof, elevators and the base building HVAC loop stay on a 39-year life, and no honest study moves them. What comes out is the fit-out layer and the site. In a multi-tenant building that fit-out layer is substantial: low-voltage data and communications cabling, dedicated circuits feeding server rooms and copy areas, decorative and accent lighting, carpet and modular flooring, demountable partitions, reception millwork, security and access control, and tenant signage. Outside the building line, the parking field, drive aisles, curbs, site lighting, landscaping and irrigation are land improvements on a 15-year life.
What usually surprises office owners
Two things. First, the cabling. A modern office carries a large amount of structured cabling, and where it serves communications equipment rather than the building itself, it is generally 5-year personal property. On a 60,000 square foot building that single category is often six figures of basis. Second, the parking. Owners think of the lot as part of the land, which is not depreciable. It is not — paving, striping, curbing, storm drainage and pole lighting are depreciable land improvements with a 15-year recovery period, and with 100% bonus depreciation in place, they are deductible in full in the first year.
Component takeoff
What we pull out of office buildings
Grouped by the recovery period each component lands on. This is representative, not exhaustive — the takeoff on your building will be longer.
- 5Structured data and communications cabling serving tenant equipment
- 5Dedicated electrical circuits and panels feeding server and equipment rooms
- 5Decorative and accent lighting, cove lighting, pendant fixtures
- 5Carpet, carpet tile, vinyl plank and other removable floor coverings
- 5Reception desks, casework and non-structural millwork
- 5Demountable and movable partition systems
- 5Security, access-control and CCTV systems
- 5Interior and exterior tenant signage
- 5Window treatments, blinds and decorative wall coverings
- 5Break room appliances, plumbing and dedicated venting
- 7Office furniture, workstations and systems furniture
- 7Certain telephone and communications equipment
- 7Loose fixtures and equipment owned by the landlord
- 15Parking lot paving, base course, striping and wheel stops
- 15Curbing, sidewalks, plaza hardscape and entry aprons
- 15Site lighting, poles, bases and site electrical distribution
- 15Landscaping, planting beds, irrigation systems
- 15Storm sewer, retention structures and site drainage
- 15Monument signage foundations, flagpoles, fencing and gates
- 39Foundation, structural frame, floor slabs and roof structure
- 39Exterior curtain wall, windows and cladding
- 39Base building HVAC distribution, chillers and cooling towers
- 39Elevators, escalators and life-safety systems
- 39Core plumbing, restrooms and general electrical service
Questions
How much of the basis usually reclassifies on this property type?
Studies on office buildings typically move 16% to 26% 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.
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.