Cost Segregation Payback Calculator

Cost seg accelerates depreciation, reducing taxes now.

Building basis

Reclass to 5/15-year %

Study fee

Marginal tax rate %

Bonus depreciation %

Year 1 tax savings

$932,400

Payback months

0.3

Reclass amount

$4,200,000

How the math works

Reclass = basis × %. Bonus = reclass × bonus %. Year 1 savings = bonus × tax rate.

$15M × 28% = $4.2M reclass × 60% bonus = $2.52M × 37% = $932k year-1 tax savings. Payback <1 month.

How to Use

Enter building cost basis.
Enter 5/15-year personal property reclass %.
Enter study fee.
Enter marginal tax rate %.
Read year-1 tax savings.

Frequently Asked Questions

Study mechanics?

Engineer-based study reclassifies building into 5, 7, 15, and 39-year assets. 5-year personal property (furnishings, specialty plumbing) and 15-year land improvements depreciate much faster than 39/27.5-year real property.

Typical reclass?

Office: 20-35% of basis to 5/15-year. Apartment: 15-25%. Retail: 25-40%. Industrial: 30-50%. Hotel: 30-45%. Reclass % drives first-year tax savings. Study typically pays for itself in 1-2 tax years.

Bonus depreciation?

2022: 100% bonus on 5/15-year property. 2023: 80%. 2024: 60%. 2025: 40%. 2026: 20%. 2027+: 0%. Combined with cost seg, produces massive first-year deductions. Time acquisitions around bonus schedule.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.