Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Estimated first-year tax savings
$21,000
First-year depreciation deduction
$60,000
Net benefit after study fee
$13,000
ROI on study fee
163%
Basis reclassified to short-life assets
$100,000
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How to use this
- 1Enter building basis (excludes land) ($).
- 2Enter % of basis reclassified to short-life assets (%).
- 3Enter bonus depreciation rate this tax year (%).
- 4Enter marginal tax rate (%).
- 5Enter cost segregation study fee ($).
- 6Read your estimated first-year tax savings on the right — it updates as you type.
- 7Hit Share to keep the scenario or send it to someone.
About this calculator
Cost segregation reclassifies parts of a building — carpet, cabinetry, parking lot paving, certain electrical and plumbing tied to specific equipment — from 27.5 or 39-year straight-line real property into 5, 7, and 15-year personal property and land improvement classes. Those shorter-life assets qualify for bonus depreciation, letting you write off a large percentage of the reclassified basis in year one instead of over decades. This calculator applies a typical reclassification percentage (studies commonly move 20-35% of building basis into short-life buckets for residential and light commercial) and a bonus depreciation rate you specify, since bonus depreciation has been phasing down under the 2017 tax law schedule — 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, absent new legislation extending it. The output is your estimated first-year depreciation deduction and the tax cash saved at your marginal rate, which is the number that actually matters for deciding whether the $5,000-$15,000 study fee pencils out.
Worked example
Using the values the calculator loads with:
Inputs
- Building basis (excludes land): 400000 $
- % of basis reclassified to short-life assets: 25 %
- Bonus depreciation rate this tax year: 60 %
- Marginal tax rate: 35 %
- Cost segregation study fee: 8000 $
Results
- Estimated first-year tax savings: $21,000
- First-year depreciation deduction: $60,000
- Net benefit after study fee: $13,000
- ROI on study fee: 163%
- Basis reclassified to short-life assets: $100,000
What each field means
Inputs
- Building basis (excludes land) ($)
- The building basis (excludes land) used in the calculation, measured in $. Starts at 400000 $ so you have a working example on load.
- % of basis reclassified to short-life assets (%)
- The % of basis reclassified to short-life assets used in the calculation, measured in %. Starts at 25 % so you have a working example on load. Accepted range: 5–45 %.
- Bonus depreciation rate this tax year (%)
- The bonus depreciation rate this tax year used in the calculation, measured in %. Starts at 60 % so you have a working example on load. Accepted range: 0–100 %.
- Marginal tax rate (%)
- The marginal tax rate used in the calculation, measured in %. Starts at 35 % so you have a working example on load. Accepted range: 0–50 %.
- Cost segregation study fee ($)
- The cost segregation study fee used in the calculation, measured in $. Starts at 8000 $ so you have a working example on load.
Results
- Estimated first-year tax savings
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- First-year depreciation deduction
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Net benefit after study fee
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- ROI on study fee
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Basis reclassified to short-life assets
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Is a cost segregation study worth it on a small rental?
Below roughly $300,000-$400,000 in building basis, engineering-based study fees often eat too much of the benefit; a rule-of-thumb allocation or a DIY approach may make more sense. Above that, and especially on multifamily or commercial, the ROI on the study fee is typically 5-15x in year one alone.
Does accelerated depreciation increase recapture risk on sale?
Yes. Section 1250 and 1245 recapture taxes back the depreciation you took, generally at ordinary rates up to 25% federal for real property, when you sell. Cost seg trades a smaller near-term tax bill for a larger recapture bill later, which is why pairing it with an eventual 1031 exchange or holding until death for a step-up in basis is the common long-term play.
What if I already own the property — can I still do a study?
Yes, through a 'look-back' study and IRS Form 3115 to catch up missed depreciation in the current tax year without amending prior returns. This is common for properties bought several years ago.
Why is bonus depreciation phasing down?
The 2017 Tax Cuts and Jobs Act set 100% bonus depreciation to step down 20 points per year starting in 2023 unless Congress extends it. Always confirm the current-year percentage with your CPA before running this calculator, since legislation has changed this rate before.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Cost Segregation First-Year Benefit Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/cost-segregation-first-year
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/cost-segregation-first-year" target="_blank" rel="noopener">Cost Segregation First-Year Benefit Calculator — RevenueLab</a> (2026).</p>
Source: [Cost Segregation First-Year Benefit Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/cost-segregation-first-year) (2026).