Estimate how much a cost segregation study could accelerate into year one — and the tax it could save — now that 100% bonus depreciation is permanent again.
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Front-loading depreciation with a study
A building is normally depreciated slowly and evenly — 27.5 years for residential rental, 39 for commercial. A cost segregation study uses an engineering analysis to carve the building into components — fixtures, flooring, land improvements, specialized systems — that legitimately belong on much shorter 5-, 7-, and 15-year schedules.
- ❯Shorter life = faster deductions. The reclassified portion (often 20–35% of the building) depreciates years sooner.
- ❯Bonus depreciation amplifies it. With 100% bonus depreciation permanent again after the 2025 law, the entire reclassified amount can often be deducted in year one.
- ❯The benefit is timing. You're accelerating deductions, not creating new ones — so the real value is the time value of money and the ability to offset income now.
The recapture trade-off
Accelerated depreciation lowers your basis, so more gain is recaptured when you sell — at up to 25% (and some §1245 components at ordinary rates). A later 1031 exchange can defer that recapture. Model both ends before committing, and have a qualified firm perform the study.
Doing this inside a DST
Cost segregation works on DST property too, because a DST is a grantor trust and you're treated as a direct owner of the real estate. Some DSTs come with a study already done — the sponsor commissions it and the accelerated depreciation flows through on your grantor letter automatically. For DSTs that don't, you can order your own study on your fractional interest, coordinating with the sponsor for the property data. Watch the 1031 basis split: generally only the excess basis (cash invested beyond your deferred gain) is eligible for acceleration and bonus depreciation.
Pairing with a 1031? Cost segregation and 1031 exchanges work powerfully together. We help accredited investors structure both — and place DST and direct replacement property. Talk to an advisor · Accredited investors only.
Frequently asked
Is this extra depreciation or just faster?
What is 100% bonus depreciation?
Will I owe it back when I sell?
Do I need a formal study?
Can I use cost segregation on a DST?
This calculator is an educational illustration based on the values you enter — not a projection, guarantee, or tax, legal, or investment advice, and not an offer of any security. Results depend on your inputs and assumptions and will differ from actual outcomes; a 1031, 721, or Opportunity Zone transaction may fail to qualify for the intended tax deferral. Consult your own CPA and attorney.
Securities offered through Aurora Securities, Inc. (ASI) — CRD #46147, SEC #8-51322 — member FINRA/SIPC. Gerald F. 'Jerry' Baker, III is a registered representative of ASI (FINRA CRD #7537416). Baker 1031 Investments, LLC is independent of ASI and is not a registered broker-dealer or investment adviser. For accredited investors only. Any offer is made solely through a sponsor's private placement memorandum following a suitability determination. DST and related securities are speculative and illiquid and involve substantial risk including possible loss of principal.