Cost Segregation Study Calculator

Estimate accelerated depreciation from cost segregation. See year 1 deduction and ROI on study.
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$
Property Type
$

Additional Year 1 Deduction

$231,272.73

Tax Savings

$74,007.27

ROI on Study

270.04%

Without Cost Segregation

Depreciable Basis$800,000.00
Normal Year 1 Depreciation$29,090.91

With Cost Segregation

Reclassified to 5/7/15 yr (30%)$240,000.00
Bonus Depreciation (Year 1)$240,000.00
Remaining Straight-Line (Year 1)$20,363.64
Accelerated Year 1 Total$260,363.64
Additional Deduction$231,272.73

Study ROI

Tax Savings (32% bracket)$74,007.27
Study Cost- $20,000.00
Net Benefit$54,007.27
Breaks Even?Yes

Use the Cost Segregation Study Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Unlock significant tax savings by estimating the accelerated depreciation your commercial property can achieve through a Cost Segregation Study. This calculator projects your immediate tax deduction, potentially boosting your cash flow by tens of thousands in 2026, and calculates the Return on Investment (ROI) for performing the study itself. Understand how reclassifying property assets can dramatically reduce your taxable income.

The calculator employs IRS-approved accelerated depreciation schedules for qualified real property components (e.g., 5, 7, and 15-year property) versus the standard 39-year MACRS schedule for real estate. It then multiplies the reclassified asset values by their respective depreciation rates, summing these to determine the total first-year accelerated depreciation. This deduction is then multiplied by your marginal tax rate to estimate immediate tax savings.

Remember, a proper Cost Segregation Study requires an engineering-based approach, not just accounting. Don't overlook 'soft costs' like architectural fees or permits, as these can also be reclassified. The ROI calculation considers the study's upfront cost against the projected tax savings over the initial depreciation period.

Example: Office Building Acquisition in 2026

  1. 1 Step 1: Input a commercial property purchase price of $5,000,000 in 2026, with an estimated Cost Segregation Study fee of $15,000 and a marginal tax rate of 35%. Assume 25% of the property value can be reclassified to accelerated depreciation categories.
  2. 2 Step 2: Calculate reclassified value: $5,000,000 * 25% = $1,250,000. Assuming an average first-year depreciation rate of 20% for these reclassified assets (actual rates vary by asset class). First-year accelerated depreciation: $1,250,000 * 20% = $250,000.
  3. 3 Step 3: Estimate first-year tax savings: $250,000 (accelerated depreciation) * 35% (tax rate) = $87,500. This is your immediate cash flow benefit.
  4. 4 Step 4: Calculate ROI on the study: ($87,500 (tax savings) - $15,000 (study cost)) / $15,000 (study cost) = 4.83 or 483%. This indicates a highly favorable return on investment in the first year alone.

Source: CFPB — Owning a Home · Last updated: April 2026

Frequently Asked Questions

What is a cost segregation study?
A cost segregation study reclassifies building components into shorter depreciation periods: 5-year (carpeting, appliances), 7-year (furniture, fixtures), and 15-year (land improvements, parking lots) instead of 27.5 or 39 years. This accelerates deductions dramatically in the early years of ownership.
How much does a cost segregation study save?
Typically 15-30% of the building cost can be reclassified into shorter-life categories. On a $1 million commercial property, this might shift $200,000 into 5-15 year categories, generating $50,000-$100,000 in additional first-year deductions with bonus depreciation at 60% in 2026.
Is a cost segregation study worth it for a rental property?
Generally worth it for properties valued at $500,000+ (building value). The study typically costs $5,000-$15,000 depending on property size and complexity. If the first-year tax savings significantly exceed the study cost, it is a strong investment. ROI is often 5-10x the study fee.

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