Round Rock, TX · $8M
New-car franchise store, 25k SF on a large display lot
Year-1 federal benefit
$754,800
Auto Dealership
Dealership cost segregation: $465K–$4.2M Year-1 deductions.
A dealership stacks two of the biggest reclass levers in real estate: a massive paved display/inventory lot (15-year land) and heavy service + body-shop equipment (5/7-year) — most of it buried on the 39-year schedule.
The 30-second answer
Auto-dealership cost segregation is an engineering-based study that reclassifies a dealership's components out of the default 39-year commercial schedule into faster 5-, 7-, and 15-year MACRS classes. It fits franchise, used-car, RV, boat, and powersports dealers, because a dealership stacks two unusually large reclass levers: a paved display/inventory lot (a store sits on ~4x its building footprint in paving + high-mast lighting, all 15-year land improvements and usually the single biggest line) and heavy service + body-shop equipment (vehicle lifts, paint booth, alignment racks, compressed air — 5/7-year personal property). That matters because, with 100% bonus depreciation, the reclassified amount (about 30% on the building and lot alone, and ~48% with a large lot and documented equipment) is deductible in Year 1.
Dealership cost segregation reclassifies 25–47% of depreciable basis from the 27.5- or 39-year shell into 5-, 7-, and 15-year MACRS classes per 26 U.S.C. § 168 and Rev. Proc. 87-56. Under OBBBA's permanent 100% bonus depreciation (placed-in-service 2025+), reclassified components are deductible in year one. All credible cost-seg providers use the same federal framework — public government construction cost data, MACRS classification, IRS Audit Techniques Guide (Pub 5653) compliance. What differs across property types is land-allocation share, FF&E weight, and material-participation eligibility under §469. For the general explanation, see what a cost segregation study is and what the report contains.
| Property type | Reclass to 5/7/15-yr | Year-1 federal benefit | Study cost |
|---|---|---|---|
| STR | 19–39% | $45K–$280K | From $495 |
| SFR | 8–32% | $16K–$165K | From $495 |
| Condo | 10–19% | $18K–$76K | From $495 |
| Brownstone | 5–20% | $60K–$640K | From $495 |
| Rowhouse | 5–18% | $10K–$170K | From $495 |
| Duplex | 8–21% | $19K–$105K | From $995 |
| Fourplex | 14–29% | $56K–$230K | From $995 |
| Office | 16–29% | $84K–$650K | From $995 |
| Retail | 20–37% | $90K–$690K | From $995 |
| Industrial | 15–28% | $78K–$840K | From $2,495 |
| Self-storage | 10–36% | $75K–$1.6M | From $2,495 |
| Medical office | 16–29% | $84K–$540K | From $2,995 |
| Mixed-use | 12–23% | $63K–$515K | From $995 |
| Multifamily | 14–28% | $44K–$200K | From $995 |
| Multifamily 5+ | 14–26% | $110K–$1.0M | From $1,995 |
| Triplex | 8–26% | $25K–$165K | From $995 |
| Restaurant | 16–29% | $72K–$430K | From $2,995 |
| Vet | 19–36% | $85K–$540K | From $2,995 |
| Gym | 21–40% | $110K–$900K | From $2,995 |
| Dealership this page | 25–47% | $465K–$4.2M | From $2,995 |
| ADU | 7–14% | $8K–$39K | From $495 |
| Commercial | 18–34% | $94K–$765K | From $995 |
| Data center | 43–65% | $2.5M–$29M | $4,995–$54,995 (sub-$100M); $100M+ by proposal |
| Senior living | 21–39% | $315K–$2.3M | By proposal |
| Funeral homes | 18–30% | $135K–$900K | By proposal |
| Child day care | 15–28% | $56K–$630K | From $2,995 |
| Adult day care | 14–26% | $78K–$780K | From $2,995 |
| Church | 10–22% | $37K–$825K | From $2,995 |
| Farm | 8–65%† | $19K–$780K | From $995 |
Reclassification ranges from the bands we publish per property type (measured on our delivered studies where we have enough of a type, modeled elsewhere); Year-1 federal benefit assumes 37% bracket and full first-year usability. Study costs are Cost Seg Smart pricing — comparable engineering studies elsewhere range $5,000–$15,000+. The ADU figure is an ADU acquired with a house; one the owner built or converted is priced on its documented construction cost, from $995. See full provider comparison.
† Farm: the figure is property with a recovery period of 20 years or less, on a farm with one or more rental houses on it. It counts 10- and 20-year property, which no other row has, and its dollar figure is a first-year deduction, not tax saved. A farm is quoted from a list of what is on it; see how.
Worked examples · modeled
What dealership cost seg looks like in practice.
Illustrative, modeled properties, not client engagements. Estimates assume 37% federal bracket and full first-year usability of the loss (active income offset or REPS). Your actual benefit varies with bracket, basis allocation, and CPA's treatment.
Good fit when…
- ✓Owners who bought or built a dealership on a large paved lot
- ✓Stores with a service department or body shop (documented equipment → observed 5/7-yr)
- ✓Franchise, used-car, RV, boat, motorcycle, and powersports dealers
Skip it when…
- ×A bare leased shell with no owned lot or equipment basis
- ×Basis under ~$1M, where the study fee gets thin against the benefit
Estimate
Run the numbers on your dealership.
Pre-set to Dealership defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$37,780
on $102,109 of accelerated deductions (Year 1, beyond straight-line)
Want this in writing for your CPA? Get a 1-page analysis →5-yr15-yr27.5/39-yr
Study cost
$895
ROI on study
42×
Delivery
1–2 business days
Your study includes more than the report.
- Engineering-based, property-specific analysis
- Direct coordination with your CPA
- Free revisions for 12 months; corrections of our errors always free
- Renovation analysis under $100,000 included
- Lifetime written audit support
- CPA-ready depreciation schedules and Excel fixed-asset file
Everything included in your study fee. Form 3115 preparation available separately.
Estimate based on public government construction cost data and IRC §168(k). Your actual result varies with property age, condition, and basis allocation.
Frequently asked
Dealership cost segregation, by question.
Do auto dealerships qualify for cost segregation?
Yes — one of the densest commercial types. The paved display/inventory lot + high-mast lighting are 15-year land improvements (usually the biggest line), and the service/body-shop equipment (lifts, paint booth, alignment racks) is 5/7-year. A typical store reclassifies 30%+ on the building and lot alone, more when equipment is documented.
Why is the display lot such a big deal?
A dealership sits on ~4x its building footprint in paved lot. That paving + lot lighting is 15-year property and usually the single biggest reclassification line — and our model scales it to your actual lot size. Bigger lot, bigger deduction.
How much does a dealership study cost?
Priced on the specialty-commercial ladder: from $2,995 for sub-$1M basis, $4,995 for a $1M–$3M store, and $10,995 for a $7M–$10M store, delivered CPA-ready in 1–2 business days. Smaller stores are completed remotely; a larger dealership (our default at $3M+ basis) may include an on-site observation.
Does it work for used-car, RV, and powersports lots?
Yes. A used-car lot is mostly the paved lot + a small office, so the 15-year site-work lever dominates. RV/boat/powersports dealers have the same showroom + service + huge lot profile. The study flexes to each.
Regulation references
The rules that govern dealership cost segregation.
- Cost Segregation for Auto Dealerships: 2026 Guide with Real Numbers — our in-depth guide to dealership cost segregation.
- Real estate professional status (REPS) — the 750-hour and 51% tests under 26 U.S.C. § 469(c)(7), and the seven material participation tests under Treas. Reg. § 1.469-5T. Required to offset W-2 income with long-term rental losses unless the property qualifies under the STR loophole.
- Form 3115 (catch-up depreciation) — how to apply cost segregation to a property placed in service in a prior year. Full § 481(a) catch-up adjustment, automatic change-number 7, no IRS user fee.
- Treas. Reg. § 1.469-1T — full reference — all six (A)–(F) exceptions that reclassify a rental as non-rental for passive activity loss purposes.
- Regulations hub — full canonical reference for all cost segregation regulations.
- irsdepreciationrules.com — companion plain-language reference for the underlying IRS depreciation statutes (operated by Cost Seg Smart).
Want your own numbers instead?
Get a free 1-page preliminary depreciation estimate for your property — we do the work, you get the PDF.
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