Cost Seg Front Loading IRA Calculator

Cost seg accelerates depreciation. This calculator models IRR lift.

Property cost basis

5-year %

15-year %

Marginal tax rate %

Discount rate %

Cost seg NPV benefit

$473,922

Year 1 tax savings (w/ bonus)

$390,720

Short-life property value

$1,760,000

How the math works

Short-life value = cost × (5-yr% + 15-yr%). Year-1 tax = short-life × bonus % × tax rate. NPV captures accelerated deduction value.

On $8M property with 22% short-life: $1.76M at 60% bonus = $1.06M year-1 deduction, $390k tax saved. NPV benefit: $150-250k vs straight-line. Cost seg fee (~$8-15k) pays back immediately.

How to Use

Enter property cost basis.
Enter 5-year, 15-year, 39-year split %.
Enter marginal tax rate %.
Enter hold years.
Enter discount rate %.
Read cost seg NPV and IRR lift.

Frequently Asked Questions

How it works?

Cost seg study identifies shorter-life components (5-year personal property, 15-year land improvements) that would otherwise be depreciated as 27.5 or 39-year. Accelerates deductions; NPV positive due to time value of money.

Typical split?

Apartment: 10-15% to 5-yr, 5-8% to 15-yr, rest 27.5. Industrial: 15-25% to 5-yr, 10% to 15-yr, rest 39. Office: 8-12% to 5-yr, 5% to 15-yr. Each study specific — engineering-based, IRS-defensible.

Bonus depreciation?

2024: 60% bonus on 5/15-year property. 2025: 40%. Declining 20%/yr until 0 in 2027. Pairing cost seg with bonus: massive year-1 deductions. Post-2027: straight 5/15-yr MACRS. Still valuable but less dramatic.