Highbridge StudiesCost segregation calculator
Cost segregation and bonus depreciation calculator
Estimate the accelerated depreciation a cost segregation study could open up through bonus depreciation, and what it could mean for your federal tax.
Estimate only. Not a cost segregation study. Not for use on a tax return.
Enter the purchase price and land value to see the estimate.
More depreciation in the first year with a study
to
Typical for this type of building, from published industry figures. Some buildings come in lower, some higher.
Could lower your federal tax for by up to
The most it could be, at the top federal rate of 37%. Yours is likely lower: a deduction this large can drop you into a lower bracket, and it counts only if it can be used that year.
Without a study: about in its first year.
A look-back study takes this on your return through Form 3115, generally with no amended returns.
Get a figure for your buildingDo not rely on any figure on this page. Speak with your accountant. This is a rough federal estimate for illustration only, not a cost segregation study and not tax, legal or accounting advice. It uses typical results for the property type from published industry figures, and the assumptions shown with the result. The tax figure uses the top federal rate and assumes the deduction can be used that year; rental losses are often limited by the passive activity rules. New York State, New York City and New Jersey generally do not follow federal bonus depreciation. A cost segregation study assigns a cost and a depreciation class to each asset. How those figures are used, including bonus depreciation, state treatment and the effect on tax, is for your accountant to decide, and responsibility for the return rests with you and your accountant. Highbridge Studies does not prepare or file tax returns.
How the calculator works
A building is normally depreciated over 27.5 years if it is a residential rental and 39 years if it is not. A cost segregation study finds the parts with shorter lives of 5, 7 or 15 years, such as appliances, flooring, paving and site lighting. Bonus depreciation lets those parts be written off in the first year: 100% for buildings bought after January 19, 2025.
The calculator takes out the land, which is never depreciated, then applies the low and high share that studies of the property type typically move to shorter lives. For a building that went into service this year or last year, it shows the extra depreciation in the first year, prorated for the month. For an earlier year, it adds up the depreciation a study would have allowed since then, which a look-back study takes as a catch-up on this year’s return.
An example
An apartment building bought for $3,000,000 that went into service in July 2026, with land valued at $600,000, leaves $2,400,000 to depreciate. Without a study, the first year brings about $40,000 of depreciation. With a study it typically brings $472,000 to $826,000 more, which at the top federal rate could lower that year’s federal tax by up to $306,000, if the deduction can be used that year. The example is an illustration only.
Related topics
Topics that go beyond this estimate, each one for your accountant.
- When the building is sold, part of this depreciation can be taxed again, which is called depreciation recapture.
- A 1031 exchange into another property can put that tax off.
- A building left to heirs generally passes with a stepped-up basis.
- The passive loss rules decide whether the deduction can be used this year.
- New York and New Jersey returns treat depreciation differently from the federal return.
Questions
Is this what a study of my building would show?
No. The calculator uses typical results for the property type. A study reads the building’s own records and visits the property, and its figures can come in above or below the range.
Why does the tax figure use the top rate?
So it can show the most a study could lower your federal tax without asking about your income. Most owners will see less. A deduction this large can drop your income into lower brackets, so part of it is worth less than the top rate, and the passive loss rules can delay it. Your accountant can work out the actual effect.
Can I use the whole deduction this year?
That depends on your tax position. Rental losses are often passive, which means they can offset only passive income, and what cannot be used carries forward to later years or to a sale. Real estate professionals, and owners of short-term rentals who take an active part in running them, can often use the deduction sooner. Your accountant can say which applies to you.
Is year two still accelerated?
Not with bonus depreciation. The parts a study finds are written off in full in the first year, so from the second year on only the structure is left, and yearly depreciation is a little lower than it would be without a study. The total over the life of the building is the same; bonus depreciation moves it into the first year. Where bonus depreciation does not apply, as on New York and New Jersey returns, those parts are depreciated over 5, 7 or 15 years instead, with more in the early years, so a study still raises depreciation for several years.
Does an older building qualify?
Generally yes. The year the building was built does not matter, and neither does how long the seller rented it. Your depreciation starts when you put the building into service, based on what you paid. Since late 2017, bonus depreciation generally applies to used property too, as long as you had not used it before and did not buy it from a related party, such as a close family member or a company you control.
Can I get a study for a building I bought years ago?
Generally yes. A look-back study is prepared the same way as any other. Your accountant files Form 3115, a change in accounting method, with this year’s return and takes the depreciation missed since the building went into service as a single catch-up, generally with no amended returns. The catch-up generally uses the bonus depreciation rate from the year the building went into service: 100% for 2018 to 2022, 80% for 2023 and 60% for 2024. Choose that year in the calculator to see an estimate.
What if the purchase contract was signed before January 20, 2025?
Tick the box under the date. For a building that went into service in 2025 or 2026 under a purchase contract signed, or construction started, before January 20, 2025, the first-year write-off is smaller: 40% for 2025 and 20% for 2026, with the rest depreciated over the shorter lives. A refinance does not change this date.
What if I built or renovated the building?
Enter the cost of the work as the price and 0 for the land. A study of a built or renovated building works from the construction records, which show what each part cost.
Is a study worth it for my building?
That depends on the building’s depreciable cost set against the fee, and on your own tax position. Highbridge Studies charges a flat fee for each building, quoted after the records are seen, and the cost page explains how it is set. If the numbers do not support a study, the preparer will say so on the first call.