For PE funds · express-wash roll-ups · multi-site operators · sale-leasebacks

Express car wash portfolio cost segregation

A car wash is mostly equipment and pavement, and the IRS puts the car wash building itself in 15-year property, with or without a study. Across a roll-up, the study is what documents each site: the land allocation, the 5-year equipment, and look-backs on washes filed as 39-year. Single sites priced by matrix from $2,995; portfolios and $7M+ sites by proposal.

Engineering-method · IRS Pub 5653 · Rev. Proc. 87-56 · public government construction cost data

What a study adds when the building is already 15-year

For most commercial real estate, the building shell dominates the basis and cost segregation reclassifies a moderate share. Car washes invert that. Strip out the tunnel equipment, the vacuums, the reclaim system, and the acres of paving, and there isn't much "building" left — and what is left is not on the 39-year schedule at all. IRS Publication 946 (Table B-1, asset class 57.1) gives car wash buildings and related land improvements a 15-year recovery period, so nearly all of a car wash's depreciable basis lands in 5- and 15-year MACRS classes.

That cuts both ways for an institutional buyer. For a site acquired after January 19, 2025, 100% bonus depreciation (restored by the One Big Beautiful Bill Act) already reaches the whole building, so the study's value there is the land allocation, a component-level record for each site, and support if a return is examined. The larger dollar value is in look-backs on washes previously filed as 39-year (Form 3115 and a Section 481(a) catch-up), in sites bought before 2025 when bonus was below 100% and the 5-year versus 15-year split sets how fast the rest is recovered, and in states that do not follow federal bonus depreciation.

How a car wash sorts into MACRS classes

Component classification per the Rev. Proc. 87-56 asset-class framework and IRS Pub 5653 engineering analysis. The equipment and site work carry the acceleration; the structure is a thin slice. (The study computes the dollar allocation from each property's actual configuration and documentation — we don't pre-assign a target percentage.)

Component MACRS class
Tunnel conveyor, arches & wash equipment
correlator, applicators, high-pressure pumps
 5-year
Dryers & blowers
high-horsepower drying systems
 5-year
Vacuum systems
per stall — often the second-largest equipment line
 5-year
Water reclamation & treatment
removable mechanical equipment
 5-year
Chemical delivery, tunnel controls & pay stations / POS
frequently six figures on multi-lane sites
 5-year
Signage
pylon / monument / directional
 5–7-year
Paving, queue lanes & vacuum-pad concrete
express sites need deep queuing
 15-year
Site drainage & oil-water separators
land improvement
 15-year
Canopies, lot lighting, fencing & landscaping
site improvements
 15-year
Tunnel structure, equipment room & office
car wash building, IRS asset class 57.1
 15-year

Reclassification share depends on wash configuration (tunnel length, vacuum count, reclaim), how much equipment was in the acquisition basis, and documentation quality. Industry ranges are general observations, not predictions for a specific site.

Illustrative: a $4.5M express tunnel acquisition

Illustrative only — real estate plus operating wash, ~130-ft tunnel, ~24 vacuum stalls, reclaim system, equipment documented in the purchase-price allocation. Actual results depend on configuration, documentation, and entity tax position.

Asset
Express exterior tunnel, real estate + operating wash (turnkey)
Depreciable basis
$4,500,000 (after carving out land + §197 intangibles)
Illustrative 5-year personal property
~45% — tunnel equipment, dryers, vacuums, reclaim, pay stations
Illustrative 15-year land improvements
~28% — paving, queue lanes, drainage, canopies, lighting
Car wash building (15-year, asset class 57.1)
~27%
Year-1 deduction (100% bonus)
Up to the full depreciable basis for a site acquired after January 19, 2025. The building reaches Year 1 through asset class 57.1 with or without a study; the study sets the land allocation and documents each component.

Figures are illustrative and rounded; they are not a prediction for any specific property. Documented equipment cost is booked at actual value and supersedes modeled estimates. State conformity to §168(k) varies. Confirm treatment with your CPA before filing.

Pricing

Single sites are priced by a transparent matrix: $2,995 under $1M basis, $4,995 at $1M–$2M, $7,995 at $2M–$4M, and $9,995 at $4M–$7M. Sites above $7M of basis and multi-site portfolios are quoted by proposal so we can scope the equipment allocation and per-site documentation properly.

Every study is CPA-ready with component-level MACRS schedules, methodology, and source documentation, and includes Form 3115 §481(a) workpapers for lookback engagements. Order a single site on the order page, or request a portfolio proposal below.

Portfolio questions

Why are car washes such strong cost-segregation candidates for a portfolio?
Because so little of a car wash is the building. The value concentrates in equipment (tunnel conveyor, dryers, vacuums, reclaim, pay stations — 5-year personal property) and site work (paving, queue lanes, drainage, canopies — 15-year land improvements), and the car wash building itself is 15-year property too: IRS Publication 946 lists car wash buildings and their land improvements in asset class 57.1. So very little of the depreciable basis stays on a long schedule, and the building is 15-year property with or without a study. For a portfolio, the study is what documents the land allocation and the 5-year versus 15-year split site by site, and express-wash layouts are standardized enough to do that systematically.
How do you handle a multi-site or roll-up acquisition?
Each site is studied individually — tunnel length, vacuum count, reclaim, and site work differ from location to location — but the process scales across a portfolio with consistent methodology and documentation standards. When the transaction includes purchase-price allocations or equipment schedules per site, the equipment is captured at documented (observed) cost rather than modeled estimate, which is the most defensible result for an institutional buyer.
Our acquisition bundled real estate, equipment, and business goodwill. How is that handled?
Carefully — and this is where many studies go wrong. A bundled operating-business purchase often includes goodwill, customer lists, and trade names, which are §197 intangibles and are NOT depreciable building basis. Those must be carved out, not swept into the cost-seg study. We flag the acquisition scope at intake and rely on the purchase-price allocation to separate depreciable real and personal property from intangibles, so the study stands up under examination.
What about a sale-leaseback?
Sale-leasebacks are common in the express-wash space and fully compatible with cost segregation — the depreciation belongs to whoever owns the real estate and the qualifying components. We scope the study to the ownership structure and the basis that actually transfers, and coordinate with your tax team on the entity that claims the deductions.
How is a car wash priced, and what about large or portfolio deals?
Single sites are priced by a transparent matrix: $2,995 under $1M of basis, $4,995 at $1M–$2M, $7,995 at $2M–$4M, and $9,995 at $4M–$7M. Sites above $7M of basis and multi-site portfolios are quoted by proposal so we can scope the equipment allocation and per-site documentation properly. Every study is CPA-ready with component-level MACRS schedules, methodology, and source documentation.
Can we run lookback studies on washes already in the portfolio?
Yes. A lookback study recovers all previously-missed accelerated depreciation in the current tax year via IRS Form 3115 and a Section 481(a) adjustment — no amended returns. A wash that was filed as a 39-year building should have been 15-year property under asset class 57.1, so this is often where a car wash study adds the most. We can run these portfolio-wide alongside new acquisitions.

Scope your car wash portfolio.

Send your acquisition list with per-site basis and any purchase-price allocations, and we'll come back with a portfolio proposal and an estimated aggregate Year-1 deduction.

See the car wash sample report · read why car washes accelerate so well · audit defense