In real estate, Cost Segregation is a tax benefit strategy that is recognized by the IRS. It involves identifying specific components within a building or improvement project that can be classified differently for federal tax purposes—either as personal property or as land improvements, rather than as real property. This reclassification allows for accelerated depreciation schedules. For example, the costs related to personal property components can be depreciated over a 5- or 7-year period, and land improvements can be depreciated over a 15-year period. This is faster than the standard 39-year or 27.5-year depreciation schedules typically applied to real property, thus providing potential tax advantages.