Commercial · 39-year property
Cost Segregation for Warehouse and Industrial Property
A distribution building is mostly slab, tilt-wall and roof, which is exactly why owners assume a study will not pay. Then you price the truck court.
The yard is the opportunity
Industrial sites carry enormous exterior improvement cost: heavy-duty concrete truck courts, trailer parking, guard shacks, perimeter fencing and gates, yard lighting on high poles, storm systems sized for acres of impervious surface, and rail spurs where applicable. All of it is 15-year land improvement property. On a build-to-suit distribution center, site work commonly runs 15% to 25% of total project cost.
Process-related building systems
Inside, the question is always whether a system serves the building or the process running inside it. Power feeding production equipment, compressed air distribution, process piping, dedicated exhaust, dock levelers, seals and shelters, in-rack sprinkler enhancements and specialty lighting tied to a work function are all candidates for shorter lives. Manufacturing tenants push this further still — see our manufacturing page for property that may also qualify under the new Section 168(n) rules for qualified production property.
Component takeoff
What we pull out of warehouse & industrial
Grouped by the recovery period each component lands on. This is representative, not exhaustive — the takeoff on your building will be longer.
- 5Dedicated power distribution, bus duct and panels serving equipment
- 5Compressed air lines, process piping and dedicated exhaust
- 5Dock levelers, seals, shelters, bumpers and restraints
- 5Task and high-bay lighting tied to a specific work function
- 5Office-area carpet, finishes, cabinetry and data cabling
- 5Security, access control, yard cameras and gate operators
- 5Battery charging stations and equipment-specific electrical
- 7Racking and shelving systems not structurally integrated
- 7Office furniture and warehouse equipment retained by owner
- 15Heavy-duty concrete truck courts and trailer storage
- 15Asphalt auto parking, drive aisles and entry aprons
- 15Perimeter fencing, gates, guard booths and bollards
- 15Yard and pole lighting, site electrical and transformers pads
- 15Storm water systems, detention basins and site drainage
- 15Landscaping, berms, irrigation and retaining walls
- 15Rail spur ballast, ties and track where owned
- 39Tilt-wall or metal building shell, structural frame and roof
- 39Warehouse floor slab and foundations
- 39Base fire protection mains and riser
- 39Building HVAC and general electrical service
Questions
How much of the basis usually reclassifies on this property type?
Studies on warehouse & industrial typically move 12% to 24% 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.