How the Cost Segregation Calculator Works

Refreshed for 2026 tax rules. The calculator combines available property records, your inputs, engineer-reviewed property assumptions and depreciation schedules. It produces a planning estimate. A property-specific engineering study is separate.

Based on our back-testing against 1,000+ completed studies, estimates are typically within 10% to 20% of final engineering study results for standard commercial properties such as offices, multifamily and retail. We offer IRS-compliant engineering studies at approximately 50% of what traditional firms charge, with Matthew’s personal review. Ask our team for your property’s quote.

1. Start with the property details

Enter your address and project details. Our AI pulls data from 15+ external sources, including broker listings, property photos, assessor records, satellite imagery, construction databases and public statistics, to suggest starting values. Check the purchase or construction costs, land allocation and property type against your documents. You can adjust those inputs in the report to explore how the result changes.

For a purchase, the starting depreciable basis is the property cost excluding land. Land does not depreciate. Improvements, acquisition costs and other adjustments can require a more detailed basis calculation for filing.

2. Estimate which assets can depreciate faster

Built by certified engineers and CPAs and benchmarked against 1,000+ studies representing over $1 billion in analyzed real estate, the calculator uses a public source containing Assumptions for 45 property types, version 2026.1.0. The bands show five-year and fifteen-year allocation assumptions, with the remainder assigned to the building's long-life schedule.

Matthew Gigantelli, ASCSP member M009-25, maintains these planning bands. He reports approximately 8,000 studies completed or reviewed over five years. The public bands summarize property-type assumptions; confidential study files are not part of the downloadable dataset.

Choose the property type that best describes the actual building. Specialized systems, site improvements and renovations can affect the eventual engineering allocation. The bands are planning assumptions, not IRS-approved percentages or a guarantee of reduced audit scrutiny.

3. Compare depreciation timing

The calculator compares the ordinary long-life schedule with a schedule that allocates some basis to shorter-life assets. Residential rental buildings generally use a 27.5-year schedule and nonresidential buildings generally use 39 years. Correct property classification matters.

The report compares the resulting depreciation over one, five and ten years and applies a fixed 37% assumed marginal tax rate to the extra depreciation. That tax rate is not an editable calculator input. Your actual rate, state rules and ability to use losses determine the tax benefit available to you.

For eligible short-life property acquired and placed in service after January 19, 2025, federal law generally allows 100% bonus depreciation. Acquisition timing, eligibility and elections matter. The current calculator assumes the restored bonus-depreciation rate for recent service years. It does not establish your acquisition-date eligibility. Confirm the applicable rate with your CPA before relying on the year-one estimate.

An example with the numbers explained

Consider a hypothetical $2.5 million low-rise office purchase with $500,000 allocated to land. Its depreciable basis is $2 million. Using the calculator's planning allocations, 20% is five-year property ($400,000), 12% is fifteen-year property ($240,000), and the remaining $1,360,000 stays on the 39-year schedule.

Assume it was acquired and placed in service in January 2026, the shorter-life assets qualify for 100% bonus depreciation, and the deductions can be used at the assumed 37% rate. Using the calculator’s rounded recovery-rate table, January mid-month depreciation on the ordinary schedule is about $49,143. With cost segregation it is about $673,417. The additional depreciation is about $624,274, producing an illustrative tax benefit of about $230,981 before study fees, state differences and taxes on a future sale.

This is an example of the calculator's arithmetic, not a customer result or a quoted study. See the four calculator examples and compare with your own property.

Turn an estimate into a useful decision

Use the report to explore the opportunity, then review the numbers with our team. Matthew can examine the actual components and help refine your estimate. We can coordinate loss eligibility, state treatment and filing details with your CPA before preparing a paid study.

The free engineer estimate is a separate human review by Matthew Gigantelli, with a response in a few business days. It is not the full paid engineering study or an IRS-defensible filing report.

Explore My Property's Potential Savings

Methods and sources

• Property assumptions and source methodology, including downloadable planning data and stated limitations.
• IRS Publication 946: depreciation, basis, bonus eligibility and accounting-method changes.
• IRS Publication 925: passive losses, participation and rental exceptions.
• IRS Publication 544: asset sales and depreciation recapture.
• Is cost segregation worth it?: apply the estimate to your tax situation, study quote and holding plan.

Planning estimates depend on inputs and assumptions. They do not replace property-specific documentation or professional tax advice.