Free cost segregation tax savings estimate
See how much you could deduct in 2027
Airbnb, VRBO, and rental property owners are using cost segregation to accelerate depreciation and offset W-2 income. Calculate your potential first-year tax savings in seconds.
Building value: $230,000
The above numbers are an estimate, and not a guarantee of specific results. We perform a virtual engineering-based study for accurate results.
Our prices make a cost segregation study worth it.
Get a detailed analysis from our team to confirm your potential savings and start maximizing your deductions.
Start my studyHow the Calculator Works
Our cost segregation calculator provides an estimate based on industry averages for residential rental properties. The calculation considers:
- Property Value: The purchase price or fair market value of your property
- Land Value: The portion of your purchase price attributable to land (non-depreciable)
- Building Value: Your purchase price minus land value — the depreciable basis
- Property Type: Residential rentals use a 27.5-year depreciation schedule; short-term rentals use a 39-year schedule
- Bonus Depreciation: Current tax law allows 100% first-year bonus depreciation on qualifying property placed in service during 2026
The calculator divides your building value into three buckets: 5/7-year personal property (15% of building value), 15-year land improvements (10%), and the remaining structure (75%). With bonus depreciation, the 5/7-year and 15-year components are fully deducted in year one, while the remaining structure continues on its standard depreciation schedule.
This residential cost segregation calculator is designed for owners of Airbnb, VRBO, and long-term residential rental properties. If you’re unsure whether your property qualifies, request a free estimate and our team will review the details.
How much of my property can I expect to be reclassified?
Typically, 15–30% of the property value can be reclassified into 5, 7, or 15 year categories. Meaning a $100,000 property could get you a $30,000 tax deduction with bonus depreciation.
These are industry averages across many studies, not guarantees for any individual property.
Worked Example: $500,000 Residential Rental
Here’s how the cost segregation study calculator arrives at its numbers for a typical residential rental purchased for $500,000 with $50,000 in land value (a 10% land allocation).
Building value (depreciable basis): $500,000 − $50,000 = $450,000
| Component | % of Building | Dollar Amount | Recovery Period |
|---|---|---|---|
| 5 & 7-year personal property | 15% | $67,500 | 5 or 7 years |
| 15-year land improvements | 10% | $45,000 | 15 years |
| 27.5-year structure (residential) | 75% | $337,500 | 27.5 years |
Year-one depreciation without cost segregation (straight-line): $450,000 ÷ 27.5 years = ~$16,364
Year-one depreciation with cost segregation + bonus depreciation:
- Bonus depreciation (5/7-year + 15-year assets): $67,500 + $45,000 = $112,500
- Remaining structure (27.5-year): $337,500 ÷ 27.5 = $12,273
- Total year-one deduction: $124,773
That’s a $108,409 increase in first-year depreciation compared to straight-line — money that reduces taxable income in the year you place the property in service.
Cost Segregation vs. Straight-Line Depreciation
| Straight-Line (No Study) | Cost Segregation + Bonus | |
|---|---|---|
| Year 1 depreciation | $16,364 | $124,773 |
| Years 2–27.5 (annual) | $16,364 | ~$12,273 |
| Total over 27.5 years | $450,000 | $450,000 |
| Front-loaded benefit | No | Yes — $108,409 in year one |
The total deduction over 27.5 years is the same — cost segregation doesn’t create new deductions, it accelerates them. The time value of money means a deduction today is worth more than the same deduction spread across decades. For a high W-2 earner in the 37% federal bracket, that $108,409 in accelerated depreciation could translate to roughly $40,000 in tax savings in year one alone.
Methodology: What Goes Into a Real Cost Segregation Study
A cost segregation calculator gives you a planning estimate. An actual engineering-based cost segregation study goes further — it examines your property’s components line by line to identify every asset that qualifies for shorter depreciation.
The IRS Audit Technique Guide for Cost Segregation recognizes three approaches: the engineering approach, the residual estimation approach, and the survey/letter approach. Our studies use the engineering approach, which is the most defensible. Here’s what that involves:
- Cost estimation: We analyze your closing disclosure (or HUD-1) and property photos to establish the total cost basis of the property.
- Component identification: Our US-based engineers identify components that can be reclassified — items like carpeting, appliances, cabinetry, fencing, landscaping, and site improvements that depreciate faster than the building structure itself.
- Asset categorization: Each component is assigned to the correct Modified Accelerated Cost Recovery System (MACRS) recovery period: 5-year, 7-year, or 15-year property.
- Documentation: Every reclassification is documented with applicable law and IRS guidance citations. The final report is 100+ pages and formatted for your CPA to implement directly on your tax return.
No site visit is required. We complete the study from property photos and purchase documents — the same inputs used in a traditional study. The deliverable is an audit-defensible engineering report, not a calculator estimate. We deliver in 3 to 5 business days for a flat fee of $2,200.
What is bonus depreciation?
Bonus depreciation allows 100% first-year bonus depreciation on qualifying property placed in service in 2026. The entire value of the reclassified 5/7-year and 15-year assets can be claimed as a tax deduction in year one — rather than spreading those deductions over 5, 7, or 15 years.
The One Big Beautiful Bill Act, signed July 4, 2025, restored 100% bonus depreciation for qualified property placed in service on or after January 19, 2025.
Can I offset my W-2 income with a cost segregation study?
By default, rental properties are passive activities under IRS rules, meaning losses cannot offset W-2 wages.
If you run your rental as a non-passive business, such as a short-term rental (Airbnb, VRBO) where you materially participate, your bonus depreciation losses can directly offset your W-2 income. This is one of the most powerful tax benefits available to STR owners.
Consult a qualified CPA or tax advisor to determine if your property qualifies.
What is a cost segregation study?
Normally, the entirety of a property’s value is depreciated over 27.5 years (residential) or 39 years (commercial). A cost segregation study is an IRS-approved process that reclassifies your property’s components into shorter depreciation categories (5, 7, or 15 years), allowing you to accelerate tax deductions. This can save thousands in taxes and improve cash flow.
What property types qualify for a cost segregation study?
Any residential investment property used for rental or business purposes can qualify, including single-family rentals, multifamily buildings, condominiums, townhomes, and short-term rentals (Airbnb, VRBO). The property must be held for business or investment use, not as a primary personal residence. If you’re unsure whether your property qualifies, a free estimate is a fast way to find out before you commit.
Can I use cost segregation on a property I already own?
Yes. If you placed the property in service in a prior year and never had a cost segregation study done, you can still capture the missed depreciation. Your CPA files Form 3115 (Application for Change in Accounting Method) to claim a §481(a) catch-up adjustment, which lets you deduct the cumulative difference between what you actually claimed and what MACRS with cost segregation would have yielded — all in one year. This does not require amending prior tax returns.
Is this a free cost segregation calculator?
Yes. The calculator above is free to use — no email, no signup, no obligation. Enter your property value, land value, and property type to see your estimated first-year tax savings. If the numbers look promising, you can request a free manual savings estimate from our engineering team, or purchase a full cost segregation study for $2,200.
How accurate is this cost segregation real estate calculator?
This calculator uses industry-average reclassification percentages (15% to 5/7-year property, 10% to 15-year land improvements, 75% remaining structure). Actual results vary by property — a newer property with more personal property components (appliances, carpeting, fixtures) typically yields more than an older property with fewer removable components. The calculator is a planning tool, not a substitute for an engineering-based study. Your actual reclassification could be higher or lower. We provide a free manual savings estimate to get an accurate figure based on your specific property.
Next steps
If your estimated savings look promising, reach out to start your study. We’ll review your property details and provide accurate figures based on a detailed engineering analysis. Every study includes full audit support at no additional cost — delivered in 3 to 5 business days for a flat fee of $2,200.