10 Depreciation Hacks Most Investors Miss
(That Could Save You Thousands)
Introduction
Most real estate investors understand the basics of depreciation. But what they don’t realize is how many opportunities they’re leaving on the table.
At Maven, we see this all the time: a client gets a basic cost seg report and thinks that’s the end of the story. But the real savings? They’re usually in the gray areas—the stuff your CPA doesn’t even know to ask about.
The truth is, there are dozens of ways to accelerate depreciation legally—you just have to know where to look.
These aren’t gimmicks. They’re IRS-backed strategies that smart investors use to lower their taxable income, increase cash flow, and reinvest faster. And they’re especially valuable if you’re working with a cost segregation firm that understands how to identify and apply them.
Here are 10 depreciation hacks to keep in mind:
At Maven, we see this all the time: a client gets a basic cost seg report and thinks that’s the end of the story. But the real savings? They’re usually in the gray areas—the stuff your CPA doesn’t even know to ask about.
The truth is, there are dozens of ways to accelerate depreciation legally—you just have to know where to look.
These aren’t gimmicks. They’re IRS-backed strategies that smart investors use to lower their taxable income, increase cash flow, and reinvest faster. And they’re especially valuable if you’re working with a cost segregation firm that understands how to identify and apply them.
Here are 10 depreciation hacks to keep in mind:
1. Modular Walls
If your property uses modular walls that can be removed, reconfigured, or relocated (like Green Zip systems), the electrical and plumbing embedded within those walls may qualify for 5-year depreciation.
That’s because they’re considered tenant-specific and not part of the building’s permanent infrastructure. If your space is built out with flexibility in mind, there’s a good chance you can accelerate some of the systems inside it.
Where it works best: Office, medical, coworking, and retail buildout.
That’s because they’re considered tenant-specific and not part of the building’s permanent infrastructure. If your space is built out with flexibility in mind, there’s a good chance you can accelerate some of the systems inside it.
Where it works best: Office, medical, coworking, and retail buildout.
2. Dedicated Electrical & Plumbing
When electrical or plumbing systems are used exclusively for tenant equipment or specialty fixtures, they can often be classified as 5-year property.
Think outlets for computer servers, wiring for AV systems, plumbing for soda machines or sterilization sinks.
If it only serves one function (and that function isn’t the building itself), you may be able to reclassify it.
Think outlets for computer servers, wiring for AV systems, plumbing for soda machines or sterilization sinks.
If it only serves one function (and that function isn’t the building itself), you may be able to reclassify it.
3. Freestanding Signage & Displays
Signage that’s bolted into the ground or mounted separately from the building can qualify for 5-year depreciation.
So can kiosks, movable display walls, and other store fixtures—as long as they’re not permanently attached.
Watch out: If your signage is built into a canopy or embedded into a wall, it may be stuck in 39-year property.
So can kiosks, movable display walls, and other store fixtures—as long as they’re not permanently attached.
Watch out: If your signage is built into a canopy or embedded into a wall, it may be stuck in 39-year property.
4. Short-Term Tenant Buildouts
If you install improvements for a short-term tenant (say, a 3-year lease) and include language in the lease that those improvements are removable, that opens the door to accelerated depreciation.
Bonus points if they’re not permanently affixed and will be removed or replaced.
Tip: Talk to your CPA before finalizing the lease. A few words in that contract can unlock significant tax savings.
Bonus points if they’re not permanently affixed and will be removed or replaced.
Tip: Talk to your CPA before finalizing the lease. A few words in that contract can unlock significant tax savings.
5. Furniture-Like Built-Ins
Just because something looks built-in doesn’t mean it has to be depreciated over 39 years.
Reception desks, conference tables, booth seating, cabinetry—if they were fabricated separately and could be removed without damaging the structure, they may qualify for 5-year depreciation.
Keep photos, invoices, or install specs. That documentation matters.
Reception desks, conference tables, booth seating, cabinetry—if they were fabricated separately and could be removed without damaging the structure, they may qualify for 5-year depreciation.
Keep photos, invoices, or install specs. That documentation matters.
For example, we recently worked with a multifamily investor who installed custom booth seating and floating vanities in their leasing office. Most engineers would have lumped that into 39-year property. But we were able to reclassify it and the investor saved over $20K that year alone.
6. Site Improvements
Exterior elements like fencing, landscaping, parking lots, and irrigation systems usually qualify for 15-year depreciation.
These are easy to miss in a cost seg study, especially for smaller properties. But if you’ve improved the exterior, there’s almost always value to extract.
These are easy to miss in a cost seg study, especially for smaller properties. But if you’ve improved the exterior, there’s almost always value to extract.
7. Qualified Improvement Property (QIP)
If you’ve made non-structural improvements to the interior of a commercial (nonresidential) building, many of those upgrades may qualify as QIP.
That means 15-year depreciation plus bonus depreciation in the year placed in service.
Common examples include lighting upgrades, drop ceilings, flooring, and non-load-bearing interior walls. Certain HVAC upgrades may also qualify if installed entirely within the interior of the building and not part of the building’s structural framework.
That means 15-year depreciation plus bonus depreciation in the year placed in service.
Common examples include lighting upgrades, drop ceilings, flooring, and non-load-bearing interior walls. Certain HVAC upgrades may also qualify if installed entirely within the interior of the building and not part of the building’s structural framework.
8. Partial Asset Dispositions (PADs)
When you replace a roof, HVAC, or flooring, you can often write off the undepreciated value of the old component.
It doesn’t matter if you didn’t break it out when you bought the property—you just need to substantiate the replacement.
This is a powerful way to avoid double depreciation and clean up your balance sheet.
It doesn’t matter if you didn’t break it out when you bought the property—you just need to substantiate the replacement.
This is a powerful way to avoid double depreciation and clean up your balance sheet.
9. Cost Seg Before a 1031 Exchange
If you’re planning to sell a property via 1031 exchange, you can still do a cost segregation study before the sale.
This lets you accelerate depreciation on short-life assets and take bonus depreciation before rolling over the gain.
It’s a smart way to double up on benefits in the final year of ownership.
This lets you accelerate depreciation on short-life assets and take bonus depreciation before rolling over the gain.
It’s a smart way to double up on benefits in the final year of ownership.
10. Bonus on Post-Purchase Improvements
Let’s say you buy a commercial property and remodel it a few months later. Even if the original building doesn’t qualify for bonus depreciation, your new improvements probably do.
As long as the improvements are interior, non-structural, and placed in service after the acquisition, you may be able to bonus-depreciate them in full.
As long as the improvements are interior, non-structural, and placed in service after the acquisition, you may be able to bonus-depreciate them in full.
Final Thoughts: Little Tweaks, Big Impact
Most investors think cost segregation is only about accelerating depreciation on a whole property. But the real value often lies in the details.
When you know where to look, you can unlock savings that most CPAs and engineers miss.
If you’re wondering what’s hiding inside your property, let’s run a no-cost review and show you what’s possible.
Get a free quote with Maven Cost Segregation
When you know where to look, you can unlock savings that most CPAs and engineers miss.
If you’re wondering what’s hiding inside your property, let’s run a no-cost review and show you what’s possible.
Get a free quote with Maven Cost Segregation
About the Author
Sean Graham, CPA specializes in cost segregation, tax depreciation, and real estate tax savings. As the Chief Technical CPA at Maven Cost Segregation: Tax Advisors, he has overseen 1000+ cost segregation studies, helping investors maximize deductions.