Bonus Depreciation Calculator

How the Bonus Depreciation Calculator Works

Easy 3-Step Process to Tax Savings

Enter Your Property Details

Estimate Your Cost Segregation Impact

See Your First Year Write-Off

Step 1:
Property Details & Cost Segregation Inputs

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You start by telling the calculator about your property. The inputs are straightforward:

Purchase price (total acquisition cost)
Land allocation (as % of purchase price or dollar amount)
Property type (residential rental, commercial office, multifamily, specialty, etc.)
Year placed in service (determines bonus depreciation percentage under current law)
Cost segregation reclassification % (either select your property type for an estimate, or enter your actual %)

If you've already done a cost segregation study, enter your actual reclassification percentage. If you haven't, the calculator provides property type based estimates from industry standards. For example:

Multifamily residential: typically 28-38% reclassified
Commercial office: typically 20-30% reclassified
Industrial/warehouse: typically 15-25% reclassified
Specialty properties (hospitality, healthcare): typically 35-50% reclassified

These percentages come from thousands of actual cost segregation studies conducted over decades. They represent the realistic amount of building basis that engineering analysis typically identifies as 5, 7, or 15 year property, things like certain finishes, mechanical systems, electrical components, and site improvements.

Step 2:
Depreciation Schedule Calculation

bonus depreciation calculated with and without cost segregation

Once you've entered your property details, the calculator runs two parallel depreciation schedules: one showing standard MACRS depreciation, and another showing accelerated depreciation with bonus depreciation and cost segregation.

Scenario A:

Standard Depreciation (No Cost Segregation, No Bonus)

All depreciable basis is treated as building property and depreciated straight-line over either 27.5 years (residential rental) or 39 years (commercial). Year 1 deduction is approximately 3.6% for residential or 2.6% for commercial.

Scenario B:

With Cost Segregation and Bonus Depreciation

This is where the numbers change dramatically. The calculator assumes you've conducted a cost segregation study, identifying which portion of your basis qualifies as 5, 7, and 15 year property. That reclassified basis gets accelerated depreciation.

For 5 year property under MACRS, the depreciation rate is 20% in Year 1 (using 200% declining balance with half-year convention). For 7 year property, it's approximately 14.3%. For 15 year property, it's approximately 5%.

But the calculator also layers in 100% bonus depreciation (under the OBBBA rules for property placed in service after January 19, 2025). This means if the calculator is running bonus depreciation scenarios, 100% of the 5, 7, and 15 year basis gets deducted immediately in Year 1.

Step 3:
Tax Savings Calculation

The calculator multiplies the extra depreciation (the delta between the two scenarios) by your marginal tax rate to show estimated federal tax savings.

You input your marginal federal tax rate. Most investors should use 37% (highest federal bracket) unless their specific situation is different. The calculator then shows:

Extra deduction in Year 1 (standard vs. with cost seg + bonus)
Estimated federal tax savings in Year 1
10-year cumulative savings (showing the full benefit window before recapture)

Critical Inputs That Drive Accuracy

Land Allocation (The Foundation)

You cannot depreciate land under IRS rules. So the accuracy of your land allocation directly determines your depreciable basis and, therefore, your deduction potential.

Your closing statement or tax-assessed value from your county assessor should show a land/building split. Use that actual number if available. If not, the calculator can estimate based on typical ratios:

Urban commercial: 20-35% land
Suburban multifamily: 15-25% land
Rural properties: 10-20% land
Land-intensive (parking lots, car washes): 40-60% land

If your land allocation is too low, your depreciable basis increases. If you overstated the land value at closing, your actual depreciable basis is smaller, which reduces potential deductions.

Property Type (The Reclassification Driver)

Property type is an important factor of cost segregation potential. A multifamily apartment complex and a warehouse, will have dramatically different reclassification percentages because they have different amounts of depreciable components.

A multifamily property has kitchen appliances, cabinets, flooring, interior walls, HVAC systems, electrical fixtures, and other shorter-life components in each unit. A warehouse has a large open space with minimal interior finishes. The difference in reclassification potential can be 10-20%.

Select the property type that best matches your asset. The calculator provides reclassification ranges for standard property types based on industry data. If you've already had a cost segregation study done, enter your actual reclassification percentage instead.

Year Placed in Service (The Bonus Depreciation Driver)

Bonus depreciation percentages change based on when property is placed in service. Under current law (OBBBA), property placed in service after January 19, 2025, qualifies for 100% bonus depreciation. But this changes over time.

The calculator accounts for this automatically. If you select a property placed in service in 2026, it applies 100% bonus depreciation. If you select 2023, it applies the old rules (0% bonus depreciation for used property). This reflects actual tax law for that tax year.

What You Can Expect

Get Estimate

The calculator is a fast, accurate planning tool that lets you estimate first-year bonus depreciation deductions and tax savings before closing.

It accounts for land allocation, cost segregation reclassification percentages, property type, and current bonus depreciation law (100% under OBBBA for 2025+).