Condo cost segregation: $18K–$76K Year-1 deductions.

Condo and townhome cost segregation is an engineering-based study that reclassifies a rental condo's components out of the default 27.5-year residential schedule into faster 5-year MACRS classes. A condo typically reclassifies 10–19% of building basis, and the composition is distinctive: because the association typically owns the land, the exterior, and the grounds, a condo carries few 15-year land improvements of its own, so most of the reclassified amount is 5-year interior property — appliances, flooring, cabinetry, fixtures, and finishes. A condo unit owner does hold an undivided interest in the association's common elements, so the study also allocates a modest share of the unit's basis to the shared outdoor site improvements it identifies, such as parking, landscaping, and fencing, as 15-year property. Across delivered studies that puts a condo's total in line with a single-family rental rather than below it, though a short-term rental still reclassifies more. With 100% bonus depreciation that amount is deductible in Year 1, though the loss is passive under IRC §469 unless you are a real estate professional, materially participate, or the unit is a short-term rental.

Condo cost segregation reclassifies 10–19% 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.

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.