Cost Segregation
An IRS-approved accounting method to accelerate depreciation of solar systems on commercial or rental properties, allowing owners to deduct a larger portion of the cost in early years.
Why It Matters
For rental property owners, cost segregation combined with MACRS depreciation can recover 85-90% of system cost through tax benefits within the first 6 years.
Related Terms
MACRS (Modified Accelerated Cost Recovery System)
A federal tax depreciation schedule that allows businesses to recover solar investment costs over 5 years, significantly improving commercial solar ROI.
Depreciation
A tax deduction that allows business solar system owners to deduct the cost of the system over time. Under MACRS, commercial solar depreciates over 5 years with possible bonus depreciation in year one.