Investor Tools
Cost Segregation ROI Calculator
Estimate your first-year tax savings from accelerated depreciation on commercial real estate. Cost segregation studies reclassify building components into 5-year and 15-year depreciation schedules — often delivering six-figure first-year tax savings.
Property Inputs
Estimated First-Year Tax Savings
$43,170
Net of estimated $5,000 cost seg study cost: $38,170 (8.6x ROI)
Basis Allocation
Year 1 Depreciation
What Is Cost Segregation?
Cost segregation is an IRS-approved tax strategy that reclassifies components of a commercial property from the default 39-year (27.5-year for multifamily) straight-line depreciation schedule into accelerated 5-year and 15-year MACRS schedules. The result: massive first-year deductions that significantly reduce taxable income.
A licensed engineering firm conducts the study, typically identifying 20-40% of the building value as reclassifiable. For a $2M NNN property, that can mean $300K-$600K of accelerated deductions in year one.
5-Year Property
Personal property components that can be reclassified from the building:
- • Decorative lighting, fixtures
- • Removable carpeting & flooring
- • Specialty electrical (process equipment)
- • Specialty plumbing (commercial kitchens)
- • Cabinetry, millwork
- • Furniture & equipment
15-Year Property
Land improvements that can be depreciated over 15 years:
- • Paving & parking lots
- • Site lighting
- • Landscaping & irrigation
- • Signage
- • Site drainage
- • Fencing & walls
39-Year Property
Structural components remaining on the standard schedule:
- • Foundation & structure
- • Roof & walls
- • HVAC (primary systems)
- • Primary electrical
- • Primary plumbing
- • Elevators
Who Benefits Most From Cost Segregation?
- •Real Estate Professionals (IRS definition) — can offset passive losses against active income
- •High-income active investors with passive income from other properties
- •Owners of $500K+ commercial properties (study ROI breaks even around this threshold)
- •Recent buyers who can apply cost seg retroactively (catch-up depreciation)
2026 Bonus Depreciation Status
Under the 2017 Tax Cuts and Jobs Act, bonus depreciation is phasing out:
2022
100%
2023
80%
2024
60%
2025
40%
2026
20%
2027+
0%
Even without bonus depreciation, cost segregation provides significant value through accelerated 5-year and 15-year MACRS schedules. Congressional proposals to restore 100% bonus depreciation are ongoing — consult your CPA for current legislation status.
Disclaimer: This calculator provides estimates for educational purposes only. Actual cost segregation results depend on a detailed engineering study, property-specific components, and current tax law. Reclassification percentages shown are typical ranges and vary significantly by property. Not tax advice. Consult a qualified CPA and cost segregation specialist before making decisions based on these estimates. MaxLife Development does not provide tax or legal advice.
Planning a CRE Acquisition?
MaxLife Development sources commercial real estate across Florida with strong cost segregation potential. We work with qualified CPAs and cost seg specialists to help clients maximize tax benefits.