Depreciation Timing Benefit Calculator

Same total depreciation, different timing, different value. Accelerated depreciation generates the full deduction in 5-7 years vs 27.5-39 years for straight-line. Same dollars, huge NPV advantage. This calculator quantifies the time-value premium of cost segregation.

Accelerated depreciation total $

Straight-line depreciation total $

Accelerated years to fully depreciate

Straight-line years

Marginal tax rate

Discount rate (opportunity cost)

NPV advantage of acceleration

$100,273

PV of accelerated tax savings

$220,155

PV of straight-line tax savings

$119,882

Annual accelerated tax savings

$42,286

Annual straight-line tax savings

$10,963

How the math works

Total depreciation is the same for accelerated and straight-line — just timing differs. The NPV advantage is pure time-value: taking the deduction now beats taking it over 27.5 years. At an 8% discount rate, the advantage is often 30-50% of total tax savings on a full-building cost seg.

The NPV advantage is what investors actually capture. The 'gross' tax savings from cost seg ignores time value and overstates the benefit.

How to Use

Enter total accelerated and straight-line depreciation amounts.
Enter years to fully depreciate each.
Enter marginal tax rate.
Enter discount rate (your opportunity cost of capital).
Read NPV advantage.

Frequently Asked Questions

Discount rate choice?

Use your cost of capital. For investors: expected equity return (often 8-12%). For high-tax individuals: after-tax cost of debt + opportunity cost. The higher the rate, the bigger the advantage of acceleration.

Is the advantage 'real'?

Yes — early tax savings are re-investable capital. $100K saved in year 1 compounds at your discount rate over the life. Accelerated depreciation is essentially an interest-free loan from the IRS.

Cost seg cost vs benefit?

Cost segregation studies cost $5K-$20K. Typical NPV benefit on a $2M property is $100K-$300K. Payback in month 1 of bonus depreciation. Nearly always worth it on mid-to-large properties.