Average Cost Segregation Percentage Depreciation?

Question

For those of you who have conducted a Cost Segregation Study, what percentage did it allow you to depreciate?

Please also state what type of property you have.

For example, Single Family, Duplex, Townhouse, etc.

I'm trying to get a ballpark % I could depreciate if I were to purchase existing or build new residential properties.

Thank You!

Lee Ripma · Answer

@Michael P.

It depends on how high your land value is. In CA vs Kansas City (MO/KS) I will get similar results after land value is taken out. With CA properties 40-50% of the value is land where in KC it is only about 5-10%. On a real 4plex in KC I got 32% bonus deprecation using DIY cost seg. My rule of thumb in low land value areas is 25% of the purchase price but it’s usually closer to 30%. Land value and finishes make a big difference so you really need to know those for your specific property. I do cost segs on all my rental props in year 1 using DIY.

This is not tax or legal advice, it is just my personal experience.

Basit Siddiqi · Answer

@Michael P.If you decide to go with a engineered cost segregation study, they will normally provide you an estimate of your tax savings.If you decide to go the DIY cost segregation route, I would normally estimate 20% to 40%.The next question should be would doing a cost segregation study help you with your situation; it may or may not.

Sarah Waterman · Answer

Hi Michael on average we write off up to 40% for clients.

Obviously it depends on your particular tax situation.