1. The property
The reclassification shares are typical published ranges, not a finding about your building. Leave them blank for the type's default, or enter the figures from a preliminary estimate.
2. Tax and fee
Assumptions: 27.5-year (residential) or 39-year (nonresidential) straight line with mid-month convention; 5 and 15-year MACRS half-year tables for what bonus does not cover; recapture taxed at your rate on reclassified property and at up to 25% on the building. Confirm each against current IRS rules and your own return.
Enter the purchase price, then click Estimate.
Result (illustrative)
Year by year
| Year | Straight line | With study | Extra deduction | Tax saved | Cumulative saved |
|---|
What this does not cover
- Not an engineering study. The reclassified shares are typical ranges. A real study inspects the property and can find far more or far less.
- Passive loss and at-risk rules. Whether the loss offsets other income depends on your status; the box above is your assumption, not a determination.
- Recapture is simplified. Actual character depends on property class and how you dispose of it; the tool is deliberately conservative.
- State tax, AMT, section 179, mid-quarter convention, look-back (Form 3115) and net investment income tax are not modelled.
- Point-in-time assumptions. Bonus rates and rules change by law and by acquisition date.
Common questions
What is a cost segregation study?
It is an engineering-based analysis that splits a building's cost into components with shorter tax lives, such as 5-year personal property and 15-year land improvements, instead of depreciating everything over 27.5 or 39 years. The shorter lives move deductions into the early years. It changes when you deduct, not the total you can deduct.
How much can a cost segregation study save?
It depends on the property, but studies commonly reclassify roughly 15% to 35% of the depreciable basis. With 100% bonus depreciation, that reclassified amount can be deducted in year one. This tool shows the first-year deduction and tax saved at your bracket, then nets off the study fee and the extra tax on sale.
Is bonus depreciation still 100% in 2026?
Under the 2025 tax law, 100% bonus depreciation was restored for qualifying property acquired after 19 January 2025. Older acquisitions used the phase-down rates of 40% to 80%. You can change the bonus rate in this tool, and your CPA should confirm which applies to your property.
What is the catch with cost segregation?
Depreciation recapture. When you sell, depreciation taken on reclassified property is generally taxed at ordinary rates rather than the lower rate for building depreciation. A 1031 exchange, or holding the property, can defer that. This tool shows the extra recapture charge so the net figure is honest.
Can I use the losses against my other income?
Not automatically. Rental losses are usually passive and limited unless you qualify as a real estate professional, meet the short-term rental rules, or have passive income to absorb them. Set the share you can use now and the tool carries the rest until a taxable sale.
Is this tax advice or an engineering study?
No. It is an illustrative estimate from stated assumptions and typical reclassification ranges. A real study is prepared by a qualified engineer or cost segregation firm and your CPA decides what to claim.