A cost segregation percentage must come from support
Cost segregation does not create new basis. It allocates supported depreciable basis among assets with different recovery periods. Enter land separately, then enter the study-supported shares assigned to 5-year personal property, 7-year property, and 15-year land improvements. The three shares cannot exceed 100%.
EstateCalc does not suggest an industry percentage. Construction records, invoices, plans, quantity takeoffs, appraisals, and a defensible methodology determine classification and value. The IRS Cost Segregation Audit Technique Guide describes elements examiners may evaluate but is not itself a legal safe harbor.
The model keeps 5-, 7-, and 15-year pools separate
The first-year regular MACRS component uses the half-year convention and unrounded rates derived from the applicable declining-balance methods: 20% for 5-year property, one-seventh for 7-year property, and 5% for 15-year property before any bonus adjustment.
A real project may trigger the mid-quarter convention, contain assets with other lives or methods, or include property ineligible for bonus depreciation. Those facts can materially change first-year depreciation, so the result is a comparison layer rather than a Form 4562 schedule.
2025–2026 bonus depreciation logic
IRS Notice 2026-11 provides guidance on permanent 100% additional first-year depreciation for eligible property acquired after January 19, 2025. In this model, an eligible short-life pool with that acquisition flag receives 100% bonus, whether placed in service in supported 2025 or 2026.
Property acquired before January 20, 2025, remains on the prior phase-down path in this limited model: 40% when placed in service in 2025 and 20% in 2026. Binding-contract acquisition rules, elections, long-production-period property, and special property classes can override that screening logic.
Compare against the correct building baseline
After land and shorter-life pools, remaining residential building basis uses 27.5-year straight-line depreciation; nonresidential building basis uses 39 years. Both use the entered placed-in-service month under the mid-month convention.
The baseline applies that same building period and service month to all depreciable basis. This isolates timing from the entered reclassification. The depreciation-increase line never subtracts the study fee; the fee is displayed separately because it is a cash item rather than depreciation.
Depreciation increase is not cash-tax savings
An additional deduction affects cash tax only after considering taxable income, passive and at-risk limitations, business-interest limits, basis, filing entity, federal rate, state conformity, and whether deductions are usable in the modeled year. EstateCalc deliberately reports depreciation, not an advertised tax-savings multiple.
Accelerated depreciation also reduces adjusted basis and can affect gain and recapture at disposition. Review the study, eligibility dates, conventions, elections, state treatment, and exit assumptions with the preparer before using the result in an investment decision or return.
Reviewed methodology and sources
The methodology is reviewed for the stated version. The result remains a scenario estimate and depends on the inputs and applicable rules.
Cost Segregation Calculator FAQ
What percentages should I enter for cost segregation?
Enter allocations supported by the property-specific study or other defensible analysis. The calculator does not provide benchmark percentages because asset mix and documentation differ.
Does all 5-, 7-, and 15-year property qualify for bonus?
No. Eligibility depends on asset class, use, acquisition, service date, and other rules. The bonus-eligible field is an attestation that must be reviewed outside the calculator.
Why does acquisition after January 19, 2025 matter?
Current IRS guidance applies permanent 100% bonus to eligible property acquired after that date. Older acquisitions can remain under prior phase-down rules even when placed in service later.
Does this calculator test the mid-quarter convention?
No. It uses the half-year convention for all shorter-life pools. If the mid-quarter test applies, the regular first-year amounts must be recomputed by quarter.
Is first-year depreciation increase the same as tax savings?
No. Tax savings depend on whether the deduction is usable, applicable tax rates, state conformity, limitations, and later recapture. The page reports depreciation timing only.
Continue the property analysis
Compare this result with adjacent metrics, keeping each formula’s income, expense, and financing scope consistent.