Commercial · 39-year property
Cost Segregation for Restaurants
No property type reclassifies like a restaurant. Between the kitchen, the finish package and the drive-through, a quarter to two-fifths of the building basis frequently belongs on a five or fifteen-year schedule.
Everything about the kitchen is short-life
A commercial kitchen is a dense concentration of personal property and the building systems that exist only to serve it. Hood systems and their make-up air, grease interceptors, dedicated gas piping, equipment power drops, walk-in coolers and freezers, floor sinks, quarry tile with specialty setting beds, and stainless wall panels are all candidates for a 5-year life rather than 39.
The dining room and the drive-through
Front of house adds decorative lighting, booth and banquette millwork, decorative ceilings and wall treatments, sound systems, point-of-sale wiring and menu signage. Outside, a quick-service restaurant carries a heavy site load: drive-through lanes, order canopies, striping, bollards, patio hardscape, landscaping and monument signage — all 15-year land improvements. Restaurants also frequently generate qualified improvement property when interiors are refreshed on a franchise cycle.
Component takeoff
What we pull out of restaurants
Grouped by the recovery period each component lands on. This is representative, not exhaustive — the takeoff on your building will be longer.
- 5Kitchen exhaust hoods, make-up air units and dedicated ductwork
- 5Equipment power drops, dedicated panels and quick-disconnects
- 5Gas piping serving cooking equipment
- 5Walk-in coolers, freezers and refrigeration lines
- 5Grease interceptors, floor sinks and specialty drainage
- 5Decorative lighting, pendants, neon and accent fixtures
- 5Booth, banquette, bar and host-stand millwork
- 5Decorative ceilings, wall panels, tile and finish carpentry
- 5Sound, paging, POS cabling and drive-through order systems
- 5Interior and exterior signage, awnings and canopies
- 7Loose dining furniture, chairs and tables
- 7Kitchen smallwares and non-affixed equipment
- 15Drive-through lane paving, curbing, islands and bollards
- 15Parking lot paving, striping, wheel stops and sidewalks
- 15Patio hardscape, pergolas, planters and site walls
- 15Site lighting, poles and monument sign foundations
- 15Landscaping, irrigation and screening
- 15Storm drainage, grease trap yard structures and utility trenching
- 15Qualified improvement property from remodels after occupancy
- 39Foundation, structural frame, roof and exterior walls
- 39Base HVAC serving the dining room and building generally
- 39Fire suppression mains, restrooms and core plumbing
Questions
How much of the basis usually reclassifies on this property type?
Studies on restaurants typically move 26% to 42% 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.