Cost Segregation Savings Calculator
Estimate how much a cost segregation study could accelerate into year one — and the tax it could save — now that 100% bonus depreciation is permanent again.
Your numbers
Total acquisition cost of the property (building + land).
Land isn't depreciable. Often 15–25% of the price.
Share of the building a study moves to shorter recovery periods. Typically 20–35%.
The 2025 law made 100% bonus depreciation permanent.
Your estimate
| Year-1 depreciation | Deduction | Tax saved |
|---|---|---|
| Without cost segregation (straight-line) | — | — |
| With cost segregation (+ bonus) | — | — |
| Additional year-1 benefit | — | — |
Accelerated depreciation is largely a deferral: it lowers basis and is recaptured at sale. Its value is the time value of money — and a future 1031 exchange can defer that recapture. Read the cost-seg memo →
Front-loading depreciation with a study
A building is normally depreciated slowly and evenly — 27.5 years for residential rental, 39 for commercial. A cost segregation study uses an engineering analysis to carve the building into components — fixtures, flooring, land improvements, specialized systems — that legitimately belong on much shorter 5-, 7-, and 15-year schedules.
- Shorter life = faster deductions. The reclassified portion (often 20–35% of the building) depreciates years sooner.
- Bonus depreciation amplifies it. With 100% bonus depreciation permanent again after the 2025 law, the entire reclassified amount can often be deducted in year one.
- The benefit is timing. You're accelerating deductions, not creating new ones — so the real value is the time value of money and the ability to offset income now.
The recapture trade-off
Accelerated depreciation lowers your basis, so more gain is recaptured when you sell — at up to 25% (and some §1245 components at ordinary rates). A later 1031 exchange can defer that recapture. Model both ends before committing, and have a qualified firm perform the study.
Doing this inside a DST
Cost segregation works on DST property too, because a DST is a grantor trust and you're treated as a direct owner of the real estate. Some DSTs come with a study already done — the sponsor commissions it and the accelerated depreciation flows through on your grantor letter automatically. For DSTs that don't, you can order your own study on your fractional interest, coordinating with the sponsor for the property data. Watch the 1031 basis split: generally only the excess basis (cash invested beyond your deferred gain) is eligible for acceleration and bonus depreciation. How cost segregation works with DSTs →
This tool is for general educational purposes only. It produces a simplified estimate, not tax advice, and omits many situational rules (stacking with other income, AMT, state-specific treatment, partial-year and like-kind nuances). Your actual tax depends on your full return. Always confirm with your CPA before acting.
Is this extra depreciation or just faster?
Faster. A study accelerates deductions into earlier years; it doesn't increase the total you can deduct over the life of the property. The benefit is the time value of money.
What is 100% bonus depreciation?
It lets you deduct the full cost of qualifying short-life property in the first year. The 2025 tax law made it permanent for property placed in service after January 19, 2025.
Will I owe it back when I sell?
Some of it. Accelerated depreciation lowers your basis, increasing recapture at sale (up to 25% on real property, ordinary rates on certain personal-property components) unless deferred via a 1031 exchange.
Do I need a formal study?
For meaningful properties, yes — a quality engineering-based study documents the reclassification and supports it on audit. This calculator only estimates the potential benefit.
Can I use cost segregation on a DST?
Yes. A DST is a grantor trust, so you're treated as a direct owner of the real estate. Many sponsors include a study that flows through on your grantor letter; if a DST doesn't include one, you can order your own on your fractional interest. Generally only the excess basis from a 1031 exchange is eligible for acceleration and bonus depreciation.