For income tax purposes, real estate investors generally depreciate residential property over 27.5 years and commercial property over 39 years but a property is never just the structure alone. It also includes other components, such as countertops, flooring, plumbing fixtures, landscaping and a lot more.

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If you were to purchase these items by themselves, you could depreciate them over 5, 7 or 15 years. They are usually purchased as part of the property acquisition and written off over the same useful life as the rest of the building: 27.5 or 39 years.

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A cost segregation study is a process that looks at each component of a property, splits them into different categories, and allows you to benefit from an accelerated depreciation timeline for some of those building components