Cost segregation calculator.

Buy a rental building and the default tax treatment is one long line: the whole depreciable cost spread evenly over 27.5 years for residential property, or 39 years for commercial. That is straight-line depreciation, and it is the baseline this calculator compares against.

A cost segregation study says that a building is not one asset. It is hundreds. The carpet, the appliances, the cabinets, the decorative lighting, the driveway, and the landscaping do not last as long as the structure and, under MACRS, they do not have to be depreciated as if they did. Separating them out is reclassification, and it is what the middle scenario in the chart above shows.

The third scenario adds bonus depreciation. Property with a recovery period of 20 years or less can be deducted in full in its first year. That is why the cost-seg-plus-bonus line spikes immediately and then sits lower than the others: you moved the deductions forward, you did not invent new ones.

The recovery periods being assigned

Every dollar of depreciable cost lands in one of these buckets. The reallocation bar above is showing you exactly this split.

Assignments depend on how a component is actually used and installed, which is the judgment a real study documents. The classes above are the common cases, not a rule you can apply by category name alone.

Why the land share matters so much

Land never depreciates. Before anything else happens, your purchase price splits into land and building, and only the building side is depreciable. That is why the land slider moves every number on the page: a 30% land allocation on a $600,000 purchase leaves $420,000 to work with, while 15% leaves $510,000.

On a real study the land share is not a guess. It comes from county assessor allocations, an appraisal, or the closing documents. Our county pages publish the assessor-derived ratios we use for Texas properties, and the study you buy shows its source for that number.

Accelerated is not free money

Two honest limits the chart makes visible if you extend the hold period. First, total depreciation over the life of the asset is the same in every scenario; cost segregation changes when you take it, not how much. Second, when you sell, the accelerated portion comes back as depreciation recapture, and the part tied to personal property is taxed at ordinary rates rather than capital-gain rates.

The deduction is also only worth your marginal rate in the year you can actually use it. For a rental that usually means either qualifying under the short-term rental rules or having other passive income to absorb the loss. Without one of those, the benefit is real but deferred.

Calculator, estimate, or study?

Three different things, and it is worth knowing which one you need.

• This calculator is for understanding the mechanics. Change assumptions, see the shape of the outcome, no email.
• The free estimate gives you a conservative-to-high-end range for your specific property, branded and ready to hand your CPA.
• The study itself measures your building part by part and produces the documented, filable report. Fees are published here.

Every figure this calculator produces is an estimate built from your inputs and typical component ratios. It is not a study, not tax advice, and not a promise about your property. Confirm your plan with your own tax advisor.