Cost Segregation ROI Calculator

Cost seg reclassifies real property into shorter recovery classes for accelerated depreciation.

Building basis

Reclassification %

Bonus depreciation %

Marginal tax rate %

Study cost

Year 1 tax savings

$74,000

Net benefit

$62,000

Reclassified amount

$500,000

How the math works

Reclass = basis × reclass %. Bonus = reclass × bonus %. Y1 savings = bonus × tax rate.

$2M × 25% = $500k reclass × 40% = $200k bonus × 37% = $74k tax savings − $12k = $62k net.

How to Use

Enter building basis.
Enter reclassification %.
Enter bonus depreciation %.
Enter marginal tax rate %.
Enter study cost.
Read year 1 tax savings.

Frequently Asked Questions

Cost segregation economics?

Reclassify 5-yr (carpet, equipment), 7-yr (FF&E), 15-yr (land improvements) personal property from 27.5/39-yr real property. Typical reclassification: 25–35% of building basis. Bonus depreciation 60% (2024) → 40% (2025) → 20% (2026) → 0% (2027) on reclass items. Study cost: $5–25k typical. Best for: properties >$1M basis, hold ≥5 years, high tax bracket investor. Trade-off: higher recapture at sale (Section 1245 ordinary rate vs Section 1250 25%).

How is this tax impact computed?

Tax outcomes depend on filing status, income bracket, depreciation schedule, basis adjustments, AMT exposure, and state conformity. Real estate tax planning typically involves cost segregation, 1031 exchanges, opportunity zone, depreciation recapture, passive activity rules, and entity structure (LLC vs partnership vs S-corp). This calculator provides directional analysis — final position requires CPA review.

State conformity?

States vary on conformity to federal tax code: California, NY, MA decouple selectively. Bonus depreciation: most states reduce or eliminate. QBI: most states don't conform. Section 1031: federal-only deferral, some states require state-level recapture. Property tax cap: state-specific (CA Prop 13, MI Headlee, FL SOH). Multi-state property requires apportionment analysis.

When to prioritize this strategy?

Tax strategies have setup cost, complexity, and audit risk. Cost segregation: $5–15k study, materially helps high-basis investors. 1031: 45/180 day deadlines, identification rules, qualified intermediary fees. Opportunity Zone: long hold required. Stack strategies: don't double-count benefits. CPA + tax attorney coordination essential for $1M+ strategies.