CalculateRealEstateROI

Tax

Cost Segregation Strategy

Engineering reclassification of building basis into shorter-life assets for accelerated depreciation.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Core concepts

Front-load deductions

20–30% of basis into 5/15-year buckets.

Pair with REPS/STR

Convert passive losses into active offsets.

Examples

  • $1M MF property → $280k year-1 deduction via cost seg + 60% bonus.

Practical applications

  • Mid- to large-asset operators.
  • STR owners.
  • REPS qualifiers.

Common mistakes

  • Cost seg without passive loss outlet.
  • Outdated cost seg post-renovation.