Common short-life assets in office buildings
A standard office building is 39-year property, but a cost segregation study routinely identifies shorter-lived components. 5-year property: specialty electrical systems, data and telecom wiring, certain floor coverings, security systems, and personal property used in the operation of the building. 7-year property: furniture and fixtures the landlord owns. 15-year property: parking areas, walkways, landscaping, fencing, outdoor lighting.
Interior improvements qualifying as Qualified Improvement Property (QIP) — renovations to occupied tenant suites or common areas after the building was first placed in service — are 15-year assets eligible for bonus depreciation, regardless of when the building was built.
Specialized office types with higher yields
A plain vanilla suburban office may have 15–20% reclassifiable. Medical and dental offices often have higher proportions of short-life property because of specialized plumbing, electrical (200-amp drops for imaging equipment), cabinetry, and casework. Technology and data center buildouts can have over 30% reclassifiable given raised flooring, precision HVAC, and UPS systems.
Lab and R&D buildings are similarly rich in 5-year personal property. If you own a specialized office, make sure your cost seg engineer has experience in that property type — misclassification is common without it.
When the numbers work
On a $3M office building, a study might identify $450,000–$750,000 in 5- and 15-year property. With 40% bonus depreciation in 2025, $180K–$300K moves to year one. Study fees for an office building typically range $6,000–$20,000 depending on size and complexity. The ROI is usually favorable above $750,000 in purchase price.
For existing buildings, the same look-back opportunity applies: claim all prior years' missed depreciation in the current year via a Form 3115 change in accounting method.
Frequently asked questions
Does a medical office get more from a cost seg study?
Often yes. Specialized plumbing, electrical drops, and medical cabinetry increase the proportion of 5-year personal property compared to a standard office.
Is tenant improvement work included?
Only improvements the landlord owns. Tenant-paid buildouts done by and for the tenant are generally the tenant's asset to depreciate.
How does the ROI compare to other property types?
Office buildings typically fall in the middle — below industrial and medical, above plain vanilla residential. Specialized offices (medical, lab, data center) outperform standard ones significantly.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.