Cost Segregation Study Calculator

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

By Konstantin Iakovlev · Updated April 2026 · Source: CFPB — Owning a Home

$
$
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

A cost segregation study reclassifies parts of a commercial building so they depreciate far faster than the property as a whole, and this tool estimates the immediate deduction that follows. It projects how much taxable income you can shift forward, the cash flow that frees up in 2026, and the return on investment (ROI) the study itself earns relative to what it costs to perform.

Behind the projection are IRS-approved accelerated depreciation schedules for qualified real property components, such as 5, 7, and 15-year property, set against the standard 39-year MACRS schedule that otherwise applies to real estate. Each reclassified asset value is multiplied by its depreciation rate, the results are summed into a total first-year accelerated depreciation figure, and that deduction is multiplied by your marginal tax rate to estimate immediate tax savings.

A defensible study rests on an engineering-based analysis rather than accounting alone, and soft costs like architectural fees or permits often qualify for reclassification, so leaving them out shortchanges the result. On the return side, the ROI weighs the study's upfront cost against the projected tax savings across 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 100% bonus depreciation in 2026 (made permanent by the One Big Beautiful Bill Act).
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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