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Cost Segregation Calculator
Estimate the first-year tax savings from reclassifying portions of a real-estate purchase into 5-, 15-, and 39-year depreciation classes, with current-year bonus depreciation applied.
Your situation
Cost segregation reclassifies building components into shorter depreciation classes, pulling deductions forward.
Year-1 tax savings
$146,103
from accelerated depreciation, before subtracting study cost
Read this carefully
Cost segregation is a timing benefit, total depreciation is the same, just front-loaded. Bonus depreciation rate phases down each year (20% in 2026). Passive activity loss rules may defer deductions for non-real-estate-professional owners. Scope a cost seg study.
Estimates for educational purposes only, not tax, legal, investment, or accounting advice. Your specific facts will change the result; confirm with a CPA before acting.Coordinate with 1031 and passive loss planning
The biggest real-estate tax wins come from stacking strategies: 1031 exchange to defer the prior gain, cost segregation to accelerate the new property's deductions, and real-estate-professional status (or PAL planning) to make sure the deductions land where you want them.
Frequently Asked
Cost segregation questions
- What is a cost segregation study?
- An engineering-based analysis that reclassifies components of a real-estate purchase from 39-year (or 27.5-year residential) to shorter depreciation lives, typically 5-, 7-, and 15-year. Lighting, plumbing fixtures, parking lots, landscaping, and specialty equipment often qualify.
- When does cost segregation make sense?
- Best suited for commercial property over $750K-$1M, where the present value of accelerated deductions outweighs the $5K-$15K study cost. Also valuable for property already owned, Form 3115 lets you catch up on missed depreciation in the year of the study.
- How does this interact with bonus depreciation?
- Bonus depreciation lets you deduct 100% of qualifying 5- and 15-year property in year one. The OBBBA (July 2025) permanently restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025, reversing the TCJA phase-down. Cost seg is what reclassifies building components into those bonus-eligible 5/15-year classes.
- Are losses immediately usable?
- Not always. Passive activity loss rules under §469 limit how much rental real estate loss can offset other income for most owners. The §469(c)(7) real-estate-professional status unlocks full deduction. Active participation gets a limited $25K allowance phased out above $100K-$150K AGI.
Keep reading
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization: a proxy for operating cash generation.
GlossaryDepreciation
The systematic expensing of a long-lived asset's cost over its useful life.
GlossaryBonus Depreciation
A 100% first-year depreciation deduction for qualifying property, permanently restored by OBBBA for post-January 19, 2025 acquisitions.
GlossaryCost Segregation
An engineering-based tax study that reclassifies portions of a real-estate purchase into shorter-lived asset classes for faster depreciation.
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