Cost Segregation Calculator
If you own a residential investment or commercial property, cost segregation is a strategic tax move that could significantly cut your tax liability. However, conducting a cost segregation study requires an investment of your time and money. Before moving forward with cost segregation, use this calculator to get an estimated value of your tax savings. The results should help you determine if this is the right strategy for your business and show the potential tax savings available through accelerated depreciation.
How To Use Merchant Maverick’s Cost Segregation Calculator
Using the cost segregation calculator is simple. Simply input the following:
- Property Type: Select your property type: Commerical or Residential Development.
- Residential investment properties include single-family rental homes, short-term vacation rentals, or multi-unit buildings such as apartments, condos, townhomes, and duplexes.
- Commercial properties include retail buildings, offices, warehouses, industrial buildings, hotels, restaurants, and other businesses and workspaces.
- Total Building Cost: Enter the total cost of your property, less the value of the land.
- Personal Property: Enter the percentage of the building that is attributed to tangible personal property that qualifies for accelerated depreciation (i.e., carpeting, appliances, furniture, equipment, window treatments, accent lighting).
- Land Improvements: Enter the percentage of the building that is attributed to land improvements that qualify for accelerated depreciation (i.e., landscaping, lighting, signage, curbs, sidewalks).
- Building Components: Enter the percentage of the building that is attributed to structural components that do not qualify for accelerated depreciation (i.e., foundations, walls, doors and hardware, permanent flooring, plumbing, electrical systems)
- Tax Rate: Input your tax rate.
For the calculator to work, personal property, land improvements, and personal property percentages should add up to 100%.
Cost Segregation Calculator Results
The cost segregation calculator provides two outputs:
- 1-year tax savings: The potential tax savings you will see in the first year following a cost segregation study.
- 5-year tax savings: The potential tax savings you will see over the first five years.
Note that this is just an estimate. As many factors can impact your cost segregation study, actual tax savings from cost segregation may vary. This calculator also does not figure in additional benefits from bonus depreciation. The calculator also does not calculate potential benefits from cost segregation look-back studies. For a more detailed estimate, contact a reputable cost segregation company for a free feasibility analysis, which will help you determine if your property is eligible for cost segregation, estimated benefits from cost segregation, and study fees.
Next Steps For Cost Segregation
Even if the results of this calculator aren’t what you expect, we recommend reaching out to a cost segregation firm for a feasibility analysis. A feasibility analysis will give you a more personalized look at how cost segregation can impact your next tax return — all at no cost. Start your search with the best cost segregation companies linked above, or learn what to look for in a cost segregation company.
We also invite you to learn more about cost segregation using our additional cost seg resources, including how to do a cost segregation study. You should also weigh out the benefits and drawbacks of cost segregation and see if cost segregation is worth the expense for your business.
