Why Use This Tool?
Cost Segregation is a tax strategy that allows real estate investors to accelerate depreciation deductions, significantly reducing their near-term taxable income. Instead of depreciating a residential building evenly over 27.5 years, an engineering study identifies components (like flooring, fixtures, and landscaping) that can be depreciated over 5, 7, or 15 years.
This calculator estimates the Return on Investment (ROI) of hiring an engineering firm to perform the study. It calculates your Accelerated Basis based on industry averages, applies the current year's Bonus Depreciation phase-out percentage (which allows you to take a massive portion of the accelerated depreciation in Year 1), and multiplies it by your marginal tax bracket to reveal your actual cash tax savings.
By comparing the massive Year 1 tax savings against the upfront cost of the study itself, investors can easily determine if a cost segregation study makes financial sense for their specific property acquisition. It is an essential calculation for maximizing cash flow in the first year of ownership.
Maximizing Efficiency
The Cost Segregation & Bonus Depreciation ROI tool is designed to save you time and reduce errors. Instead of manual calculations, get instant, accurate results that help you make better investment decisions.