Cost Segregation Calculator

A cost segregation study takes a commercial or residential-rental building and splits its depreciable basis (the building value, since land itself never depreciates) into pieces that legally qualify for much shorter recovery periods than the standard 27.5-year straight-line schedule the IRS assigns residential rental real property under MACRS (see IRS Publication 946, "How To Depreciate Property"). This calculator carves out a Personal Property slice (carpets, fixtures, appliances — 5/7-year MACRS property) and a Land Improvements slice (parking, landscaping, sidewalks — 15-year property), leaving the remainder on the normal 27.5-year track. Each reclassified slice gets whatever share of Bonus Depreciation percentage you enter written off immediately, with the rest following its published first-year MACRS percentage under the half-year convention (20% for 5-year property, 5% for 15-year property, per Publication 946's MACRS percentage tables).

Comparing that accelerated year-1 depreciation against what straight-line alone would have produced shows the additional deduction, which is then multiplied by your combined federal-plus-state marginal tax rate to get actual cash tax savings — netted against the study's own fee for an ROI figure. The 5-year projection and present-value benefit use simplified assumptions (a flat 85% present-value factor on the gap between year-1 and 5-year savings) rather than a full amortization schedule, so treat them as directional, not audit-ready. Bonus depreciation is phasing down 20 points a year from its 100% peak, so the rate you enter should match the specific tax year the property is placed in service, and this tool doesn't model depreciation recapture on sale — a real consideration when the accelerated deductions eventually get taxed back at disposition.