Cost Segregation Calculator
Calculate accelerated depreciation amount and tax savings from cost segregation study allocations.
How it works
Allocates building components to shorter depreciation periods (5, 7, 15 years) versus standard 39 years commercial/27.5 years residential, calculating first-year tax benefits.
Example
$1M building with 30% allocated to short-term = $105,000 additional first-year tax savings.
FAQ
What is cost segregation?
Cost segregation is a tax strategy that identifies building components that can be depreciated over shorter periods (5, 7, or 15 years) instead of the standard 27.5 or 39 years.
What property types benefit from cost segregation?
Commercial properties, apartment buildings, retail centers, and industrial facilities typically benefit most, especially those worth $500,000 or more.
How much can be allocated to shorter depreciation periods?
Typically 20-40% of the building's cost basis can be allocated to 5, 7, or 15-year property, depending on the property type and improvements.
When should I do a cost segregation study?
Ideally in the year you acquire or substantially improve a property. You can also do catch-up studies for prior years using Form 3115.
What are the risks of cost segregation?
Depreciation recapture upon sale and potential IRS scrutiny. Benefits usually outweigh risks, but consult a tax professional.