Calculators › Cost Segregation Estimator
TaxesBy Cedrick Reese, Property Rental Calculator
Free calculator that estimates the first-year bonus depreciation deduction and potential tax saving from a cost segregation study.
Your property
Sets a typical reclassification rate you can edit below.
Typical: single-family 15 to 25%, multifamily 18 to 28%, short-term rental 22 to 35%.
OBBBA restored 100% for property placed in service after Jan 19, 2025.
Federal. State tax would add more.
Illustration only, not a cost segregation study or tax advice. Real allocations require an engineering study, the deduction may be limited by the passive-loss rules, and the accelerated components increase depreciation recapture at sale. Bonus depreciation figures reflect current OBBBA rules. Consult a CPA. Last reviewed August 2026.
The number above is the deduction a study could produce. Whether it offsets your W-2 or other active income is a separate question. Rental losses are generally passive, and passive losses usually only offset passive income unless you materially participate as a real estate professional, or the property is a short-term rental where the average stay is seven days or less and you materially participate. Many high earners buy a short-term rental specifically for this reason. If none of those apply, the deduction still shelters the property's own income and carries forward, but it will not wipe out your salary's tax bill.
On a $600,000 single-family rental with 20% land, the depreciable building basis is $480,000. Reclassify 20% of that, or $96,000, into short-life property, and 100% bonus depreciation writes off the full $96,000 in year one. At a 32% marginal rate that is about $30,720 of tax saving, versus roughly $14,000 of ordinary straight-line depreciation on the shell. The difference is timing pulled forward, not free money.
Front-loading depreciation increases what you owe later. The reclassified 5, 7, and 15-year components are Section 1245 property, and their depreciation recaptures as ordinary income when you sell, with no 25% cap. Model the exit before you commit. The depreciation recapture estimator handles that side, and the OBBBA tax changes explain the bonus-depreciation rules behind this tool.
Only if you meet the passive-loss rules: real estate professional status, or a short-term rental with material participation. Otherwise the deduction offsets passive income and carries forward.
For a defensible allocation, yes. This tool estimates the potential; a qualified cost segregation study produces the actual component breakdown the IRS expects.
Generally when the building basis is around $500,000 or more, you plan to hold at least a few years, and you can actually use the deduction. Smaller properties can still pencil with a simpler desktop study.
Yes. The One Big Beautiful Bill Act restored 100% bonus depreciation permanently for qualified property placed in service after January 19, 2025.
Cedrick Reese, a web developer, built this estimator around the standard cost segregation approach: split the depreciable building basis into land, long-life shell, and the 5, 7, and 15-year components a real engineering study would identify, then apply the current bonus depreciation rate to the reclassified portion. The 100% bonus rate used here reflects the One Big Beautiful Bill Act's restoration of full first-year bonus depreciation for property placed in service after January 19, 2025, and this tool gets updated whenever that schedule changes again. It's built to illustrate the math a study could produce, not to substitute for the study itself.