How Much Does Cost Segregation Actually Save?
Real-world savings ranges based on 1,000+ completed studies analyzing over $1 billion in commercial real estate. This is institutional-grade data we're making publicly accessible for the first time.
What you're about to see represents years of proprietary engineering analysis—data that cost segregation firms typically keep behind closed doors.
Our lead engineer, Matthew, built this database through thousands of real studies. These aren't theoretical estimates. These are actual results from properties just like yours. We're publishing this data to democratize access to cost segregation—a strategy that's been reserved for institutional investors and high-net-worth individuals for too long.
Cost segregation doesn't create "new" deductions—it accelerates them. By identifying building components that depreciate in 5 or 15 years instead of the standard 27.5 or 39 years, investors can reduce their taxable income significantly in the early years of ownership.
The time value of money makes this powerful: a dollar saved on taxes today is worth more than a dollar saved five years from now. This is why sophisticated real estate investors and institutional funds treat cost segregation as standard practice on every acquisition above $500k, not an optional strategy.
With 100% bonus depreciation now reinstated (legislation enacted July 2025), reclassified assets can be fully deducted in year one, amplifying these savings even further. The total lifetime depreciation stays the same—you're just shifting when you take it. Instead of waiting 27.5 years to fully depreciate a carpet, you depreciate it over 5 years (its actual useful life). The IRS Cost Segregation Audit Techniques Guide explicitly permits this when properly documented by qualified engineers.
Actual Acceleration Ranges by Property Type (Based on $1B+ in Analyzed Real Estate)
These percentages represent how much of your building's depreciable basis can typically be reclassified from standard 27.5-year (residential) or 39-year (commercial) depreciation to accelerated 5-year and 15-year schedules. Every number below comes from our proprietary database of 1,000+ completed engineering-based studies.
This is not theoretical data—these are real results from actual IRS-compliant studies conducted on properties across the United States between 2020–2025. The ranges reflect variation in construction quality, age, amenity levels, and regional building methods.
| Property Type | Purchase Price Range | Accelerated Depreciation Range | Primary 5-Year Components |
|---|---|---|---|
| Single-Family Rental | $300k – $2.5M+ | 24% – 34% | Cabinets, flooring, appliances, fencing |
| Duplex/Triplex/Fourplex | $400k – $3M+ | 24% – 32% | Unit improvements, parking, landscaping |
| Multifamily (6–20 units) | $1M – $15M+ | 28% – 38% | Common areas, clubhouse fixtures, pool |
| High-Rise Apartment (7+ stories) | $10M – $200M+ | 30% – 40% | Luxury finishes, gym, rooftop amenities |
| Office (Low-Rise, <4 stories) | $1.5M – $50M+ | 26% – 38% | Tenant fit-outs, carpet, data cabling |
| Office (Mid/High-Rise, 5–12 stories) | $10M – $300M+ | 26% – 38% | Specialized systems, lobby finishes |
| Restaurant (Quick Service) | $500k – $5M+ | 30% – 38% | Kitchen equipment, specialty plumbing |
| Restaurant (Full Service) | $1M – $15M+ | 32% – 44% | Bar fixtures, wine storage, millwork |
| Retail Strip Center | $2M – $50M+ | 30% – 38% | Storefronts, tenant improvements, signage |
| Hotel (Full Service) | $10M – $500M+ | 32% – 42% | FF&E, specialty lighting, pool systems |
| Warehouse / Industrial | $2M – $150M+ | 15% – 28% | Paving, loading docks, racking systems |
| Medical Office Building | $3M – $100M+ | 30% – 38% | Medical gas, specialized HVAC, casework |
*"Accelerated Depreciation Range" = percentage of depreciable basis (Purchase Price minus Land Value) reclassified to 5-year and 15-year property combined. Data represents observed ranges across 1,000+ engineering-based cost segregation studies completed by our team, representing over $1 billion in analyzed real estate. Individual results vary based on construction quality, property age, specific features, and level of interior improvements. Lower end of range typically applies to older, simpler construction; upper end applies to newer properties with extensive amenities and specialty systems.
Why We're Publishing This Data
Most cost segregation firms guard these ranges like state secrets. They use information asymmetry to justify high fees and keep property owners in the dark about what's actually possible.
We're flipping that model. Matthew built this company on the belief that tax strategies shouldn't be reserved for billion-dollar funds. If you own a $500k rental property, you deserve the same quality analysis as someone buying a $50M apartment complex.
This data alone—compiled from years of field work and engineering analysis—would cost millions to replicate. We're making it free because transparency drives better decisions.
Real Example: $1M Multifamily Property
Purchase Price: $1,000,000
Land Value: $200,000
Depreciable Basis: $800,000
Without Cost Segregation: $29,090 annual depreciation for 27.5 years
With Cost Segregation (using 30% reclassification from our data):
- 5-year property: $176,000 (22%)
- 15-year property: $64,000 (8%)
- 27.5-year property: $560,000 (70%)
With 100% Bonus Depreciation (Now Available via July 2025 Legislation):
First-year deduction on reclassified assets: $240,000 (5-year + 15-year property taken immediately)
Plus standard depreciation on remaining 27.5-year property: $20,364
Total first-year depreciation: $260,364
At a 35% tax rate, that's $91,127 in first-year tax savings—compared to $10,181 without cost segregation. The 100% bonus reinstatement makes this strategy 9x more powerful than standard depreciation.
Note: 100% bonus depreciation applies to property placed in service after January 19, 2025 per the One Big Beautiful Bill. Half-year convention and mid-quarter rules may apply. Use the calculator to model your specific scenario.
Who Gets the Most Benefit?
Based on our 1,000+ studies analyzing over $1 billion in real estate, these investor profiles consistently see the highest ROI:
High-Income W2 Earners with REPS
Doctors, tech employees, executives who qualify as Real Estate Professionals (750+ annual hours in real property trades per IRC §469(c)(7)) can offset their W2 income—not just rental income. This is the highest-value application in our database.
Short-Term Rental Operators
Properties with <7-day average guest stays often escape passive activity limitations entirely under IRS rules, making cost seg deductions immediately usable against all income types—no REPS required.
Properties > $500k Depreciable Basis
Tax savings consistently outweigh study costs at this threshold. Our data shows typical ROI of 15x–40x in year one, with some high-reclassification properties (restaurants, hotels) exceeding 50x.
Long-Term Holders (3–5+ years)
Investors who hold long enough to compound the time-value benefit see the most dramatic wealth creation. Short hold periods (<18 months) reduce ROI due to depreciation recapture on sale.
Common Questions About Savings
Does this work for properties I bought years ago?
Yes. You can perform a "look-back" cost segregation study on properties purchased in prior years and claim catch-up depreciation in the current tax year using Form 3115 (change in accounting method). You don't need to amend prior returns—the IRS allows you to claim all "missed" depreciation in one year.
Our database includes hundreds of look-back studies. The savings are identical to studies done at acquisition—you just claim them all at once rather than spreading them across multiple years.
What about depreciation recapture when I sell?
Yes, accelerated depreciation is recaptured at sale (taxed as ordinary income up to 25% recapture rate). However, the time value of having that cash earlier almost always outweighs the recapture cost, especially on hold periods of 3+ years. Additionally, 1031 exchanges can defer recapture indefinitely.
Ready to See Your Property's Numbers?
Get an instant estimate using our free calculator powered by our $1B+ database. If the ROI makes sense, we'll deliver an IRS-compliant study at 50% of what traditional firms charge—with full transparency and Matthew's personal review of every number.
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Learn more about cost segregation with these related guides:
- → Is Cost Segregation Worth It? — Decision framework to evaluate your property's ROI
- → How the Calculator Works — Understand our AI methodology and accuracy
- → Why Our Studies Cost 50% Less — Learn about our pricing and democratization philosophy
Disclaimer: Ranges shown are based on aggregated historical data from 1,000+ completed engineering-based cost segregation studies analyzed by our team. Individual results vary based on specific property characteristics, construction methods, age, condition, and other factors. This information is for educational purposes and does not constitute tax, legal, or financial advice. Consult with qualified professionals regarding your specific situation.