Calculation Results
About This Calculator
Estimate immediate first-year tax depreciation write-offs by segregating building purchase price into 5-year personal property, 15-year land improvements, and straight-line real property.
Frequently Asked Questions
What is a Cost Segregation study in US tax law?
A cost segregation study is an IRS-approved engineering-based tax strategy that accelerates depreciation by identifying building components that can be reclassified into 5-year, 7-year, or 15-year MACRS recovery periods instead of 27.5 or 39 years.
What qualify as 5-year and 15-year property?
5-year items include decorative lighting, dedicated electrical circuits, vinyl/carpet flooring, security systems, and kitchen cabinetry. 15-year items include exterior land improvements like asphalt parking, concrete walkways, landscaping, and fences.
How does Bonus Depreciation phase out under the TCJA?
Under the Tax Cuts and Jobs Act, bonus depreciation on qualified short-life assets was 100% through 2022, 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% starting in 2027, unless extended by Congress.
What happens upon property sale (Depreciation Recapture)?
When the real estate is sold, accelerated personal property (Section 1245) is recaptured at ordinary income tax rates (up to 37%), while building depreciation (Section 1250) is recaptured at a maximum 25% rate, unless deferred via a Section 1031 Exchange.