Why retail properties reclassify well in California
California is the largest U.S. real estate market by basis, but high state income tax rates make federal cost segregation deductions especially valuable. California decouples from federal bonus depreciation, so studies model both federal and California books separately.
Retail properties have a particular profile that makes cost segregation especially valuable: strip centers, single-tenant, anchored — site work, signage, TI allowances. The shell sits on a 39-year recovery period under MACRS — but every retail is hundreds of components, many of which qualify for 5-, 7-, or 15-year recovery and accelerated bonus depreciation.
Typical reclassification ratio
For a retail in California, TDA studies typically reclassify 20–28% of depreciable basis. Combined with 100% OBBBA bonus depreciation on property acquired and placed in service after January 19, 2025, that translates the entire reclassified amount into a year-one deduction.
California markets we serve
We deliver retail cost segregation studies across California, including Los Angeles, San Diego, San Jose, San Francisco, Sacramento. Engineering-based methodology and RSMeans cost data on every engagement.