Office Building Cost Segregation Case Study

In August of 2025, Client OB acquired a two-story office building with a depreciable basis of $10.4M.  Property OB included all the office essentials – conference and break rooms, generous parking, and of course, an enormous “cubicle farm.”

Client OB was eager to maximize tax savings on their new acquisition.

The team worked closely with Client OB to understand their property and their needs.  After analyzing the building in question, the team proposed a Cost Segregation Study to maximize tax savings via accelerated depreciation and bonus depreciation.

Commonly Segregated Assets in Office Buildings

The Walz team felt confident that Property OB would be a good candidate for a Cost Segregation study.  Office buildings generally contain many assets that may be accelerated into shorter class lives, accelerating their depreciation and taking advantage of the time value of money.

5-Year Assets

• Cubicle area: dedicated circuits with duplex receptables powering office equipment, voice/date receptables with dedicated wiring
• Conference rooms: folding leaf partitions, motorized projection screens
• Breakrooms: sinks, cabinets, counters
• Cafeteria: ice machine, dishwasher, associated rough plumbing
• Common areas: decorative millwork, mirrors
• Closed-circuit surveillance, carpet, and wallpaper throughout throughout

15-Year Assets

• Paved parking areas and sidewalks
• Sod lawns, planting beds, and other decorative landscaping
• Concrete pavers
• Illuminated bollards and signage

Additionally, the One Big Beautiful Bill Act (OBBBA) recently restored bonus depreciation to 100%, further boosting the power of a Cost Segregation Study.

Bonus depreciation is an incentive above and beyond accelerated depreciation, and may be applied to assets with class lives of 20 years or less.  Historically, bonus depreciation has permitted the additional write-off of part of the value of eligible assets.  Properties placed-in-service on/after January 20, 2025 – like Property OB — can now write off the entire value of eligible assets.

Study Process and Documentation

An experienced engineer reviewed all property documentation before visiting Property OB.  While on site, the engineer did a thorough walk-through of the property, taking copious notes and photographs of all indoor and outdoor features.

The engineer then reconciled his notes with client-supplied documentation, and began the job of identifying, quantifying, and costing property assets.

After the report was completed, technical and tax reviews were performed to ensure precision and accuracy.

The report was delivered 4 weeks after the site visit was completed.

Outcome

The engineer was able to move 30% of assets into shorter-lived class lives:

• 7% of assets into 5-year personal property
• 3% of assets into 15-year land improvements

The study yielded a first-year tax savings of $1,024,358.

Client OB was pleased with the ease of the process and the outstanding results.