Cost Seg Benefit Calculator

Cost segregation studies reclassify 15-30% of building basis from 27.5/39-year property into shorter 5/7/15-year recovery classes — carpet, appliances, fixtures, land improvements. Combined with bonus depreciation, this delivers significant first-year tax acceleration. This calculator computes net benefit (tax saved minus study cost) and ROI.

Building cost basis

Reclassified to short-life %

5/7/15 yr property

Cost segregation study cost

Marginal tax rate %

Bonus depreciation %

Tax year - check phase-down

Net first-year benefit

$7,200

First-year tax savings

$19,200

First-year accelerated deduction

$60,000

Study ROI %

60.00%

How the math works

Cost segregation studies reclassify 15-30% of building basis from 27.5/39-year property into shorter 5/7/15-year recovery classes (carpet, appliances, land improvements). Combined with bonus depreciation, this can deliver 5-10x first-year deduction acceleration.

Studies cost $4K-25K depending on property complexity. Often pay for themselves 5-15x in first year on properties over $500K.

How to Use

Enter building cost basis and projected reclassification %.
Enter cost segregation study cost.
Enter marginal tax rate and current-year bonus depreciation %.
Read first-year tax savings, net benefit, and study ROI.

Frequently Asked Questions

When does cost seg make sense?

Properties over $500K-1M typically. Studies cost $4-25K. Net benefit usually 5-15x cost in first year. Even better with full bonus depreciation (pre-2024).

Look-back studies?

Yes — for properties owned several years, you can do a cost seg study and catch up missed depreciation via §481 adjustment in current year. Significant catch-up benefit.

Recapture risk?

Accelerated depreciation increases recapture at sale (taxed at 25%). Net benefit usually still strong because of time value, but factor recapture into multi-year planning.