The numbers · Cost segregation planner · Wealth
A paper loss with a price tag on both ends.
Cost segregation front-loads depreciation; bonus depreciation detonates it. See the year-one deduction, what it's worth at your rate, whether the study pays for itself — and what it books against your exit.
Inputs
Purchase price$850,000
Land share of price20%
Reclassified to 5/7/15-yr25%
Bonus depreciation rate100%
Marginal tax rate35%
Cost of the study$6,000
Approximation for planning, not a study: bonus applies to the reclassified short-life basis; the non-bonused remainder takes a first-year 200%-DB pass; long-life basis runs straight-line. Passive-loss limits decide whether you can use the loss this year — see REPS and the STR loophole.
First-year deduction — with and without the study
Straight-line only
$25k
Bonus on reclass
$170k
With cost seg
$189k
Future recapture
$47k
Improvement basis $680k after carving out 20% land — land never depreciates. Recapture shown at the 25% §1250/§1245 planning rate.
Year-1 paper loss
$189k
vs. $25k straight-line — 7.6× acceleration
Tax shielded year 1
$66k
At your 35% marginal rate ($9k of it was free anyway)
Study ROI
9.6×
$57k extra shield ÷ $6k study
The verdict
Order the study. $189k of first-year depreciation — $164k more than straight-line alone — shields $57k of tax beyond the baseline, a 10× return on the $6k study. Remember the fine print: this is deferral, not forgiveness — roughly $47k of recapture is now booked against your exit unless a 1031 or the step-up carries it out.
Reclassified basis$170k
Bonus deduction$170k
Extra vs. straight-line$164k
Recapture booked$47k