Cost Segregation in Boston, MA: $126,360 in Accelerated Depreciation

Boston's triple-decker housing stock is uniquely suited for cost segregation — three full kitchens, three bathrooms, and three sets of fixtures mean more components in shorter MACRS classes. Massachusetts conforms to federal bonus depreciation at a flat 5% state rate.

$126,360 Accelerated Depreciation

$53,071 Est. Year-1 Tax Savings

53x Return on Study Cost

See Your Boston Tax Savings

Property Type

Purchase Price

$53,071

Estimated Year-1 Tax Savings

$126,360

Accelerated Deductions

$995

Study Cost

53x

ROI on Study

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Estimates are for illustration only. Details

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

$126,360 total reclassified into shorter recovery periods

5-Year Property $84,240

66.7%

7-Year Property $10,080

15-Year Property $32,040

25.3%

Estimated Year-1 Tax Savings $53,071

Illustrative estimate. Final allocations vary based on property facts and report findings.

Method

Year-1 Deduction

Difference

Standard (27.5yr straight-line)

$25,527

—

With Cost Segregation + Bonus

$126,360

+$100,833

Estimated deduction based on typical cost segregation allocations for Boston triplex properties. Actual study results may vary based on property-specific analysis including age, condition, renovations, and local construction costs.

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Component-by-component breakdown, MACRS schedules, and Form 3115 filing instructions. This is the actual deliverable — see exactly what your CPA receives.

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Cost Segregation in Boston, MA

$900,000 Boston triple-decker property — cost segregation depreciation example

Top Neighborhoods

Somerville, Dorchester, Jamaica Plain

Typical Year-1 Savings

$35,000–$65,000

The triple-decker is the defining housing type of Greater Boston. These three-unit buildings — stacked flats with separate entrances, typically built between 1890 and 1930 — are found throughout Somerville, Dorchester, Cambridge, Jamaica Plain, South Boston, Medford, and Quincy. Investors buy triple-deckers at $700K-$1.2M and generate $5,000-$8,000 per month in combined rental income across the three units.

What makes triple-deckers particularly strong cost segregation candidates is the multiplication of reclassifiable components. Three full kitchens with cabinets, countertops, and appliances. Three bathrooms with fixtures, tile, and vanities. Three sets of flooring, light fixtures, and interior doors. Each unit's personal property components fall into the 5-year MACRS class, and having three units multiplies the total reclassified amount compared to a single-family home at the same price point.

Massachusetts has a flat 5% state income tax that conforms to federal bonus depreciation. Combined with the 37% top federal rate, Boston investors face a combined marginal rate of 42% — meaning every $100,000 reclassified through cost segregation produces approximately $42,000 in year-one tax savings. For a $900K triple-decker with 22% allocated to land, the $702K depreciable basis typically yields $126K in accelerated depreciation and roughly $53K in first-year combined tax savings.

What People Worry About (and What Actually Happens)

"Will this trigger an IRS audit?"

No. Cost segregation is explicitly supported by IRS guidelines (Rev. Proc. 87-56) and the IRS Audit Techniques Guide for Cost Segregation. Tens of thousands of studies are filed every year. Our reports are designed to withstand scrutiny — that's why they run 35+ pages with component-level documentation.

"Is this aggressive tax strategy?"

Cost segregation is standard practice, not a loophole. The IRS has published formal guidance on how to do it correctly. Every Big 4 accounting firm offers it. We follow the same engineering-based methodology — just faster and at a fraction of the cost.

"What if I sell in a few years?"

You'll owe depreciation recapture at 25% on the accelerated portion when you sell. But if you 1031 exchange into another property, recapture is deferred indefinitely. For most investors, the upfront tax savings far outweigh the eventual recapture — especially when you factor in the time value of money.

"My CPA hasn't mentioned this."

Most CPAs know about cost segregation but don't proactively recommend it because they don't do the engineering analysis in-house. That's what we provide. Your CPA files the results — we email them a CPA-ready package with everything they need, and we answer any questions they have directly.

Why Cost Segregation Works for Multi-Family Properties

Multi-family properties like triple-deckers contain a higher density of reclassifiable components per dollar of purchase price than most single-family rentals. Each unit has its own kitchen (cabinets, countertops, appliances, plumbing fixtures), bathroom (vanities, tile, fixtures), and living spaces with individual flooring, lighting, and interior finishes. All of these qualify as 5-year personal property under the IRS MACRS classification system. For a three-unit building, that's three times the personal property of a single-family home.

Beyond interior components, shared building systems and site improvements add additional reclassification value. Common-area lighting, shared laundry hookups, parking areas, walkways, fencing, landscaping, and exterior stairways fall into the 7-year or 15-year MACRS class rather than the default 27.5-year residential schedule. Older Boston triple-deckers often have separate utilities, fire escapes, and exterior improvements that qualify for shorter recovery periods.

With 100% bonus depreciation permanently restored under the One Big Beautiful Bill Act (signed July 2025), every dollar reclassified into 5-year, 7-year, or 15-year MACRS classes is deductible in full in the first year. For Massachusetts investors, this means both federal and state savings in year one — a combined 42% rate on every reclassified dollar.

Who This Example Applies To

Triple-decker and multi-family property owners in Greater Boston
Investors who own 2-4 unit residential rental buildings (duplexes through fourplexes)
Taxpayers in the 32-37% federal bracket (42% combined with MA state tax)
Owners of recently renovated triple-deckers with updated kitchens and bathrooms

If you occupy one of the units, the study applies only to the rental portion of the property. If your property has minimal improvements or you plan to sell within 1-2 years, the benefit may be reduced. Actual results vary based on property age, condition, renovations, and local construction costs.

Hear From a Multi-Family Property Owner Who Did This

This investor ordered a cost segregation study and used the accelerated depreciation on their next tax return. Here's what happened.

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Compare: Boston Triplex at Different Price Points

Price	Accelerated	Tax Savings	Study Cost	ROI
$700K	$98,280	$41,278	$995	41x
$900K	$126,360	$53,071	$995	53x
$1.1M	$154,440	$64,865	$1,395	46x
$1.4M	$196,560	$82,555	$1,395	59x

Compare: $900,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Triplex	$126,360	$53,071	$995	53x
Duplex	$123,552	$51,892	$995	52x
Condo / Townhome	$95,472	$40,098	$795	50x

Frequently Asked Questions

Do triple-deckers qualify for cost segregation? ▼

Yes. Triple-deckers (triplexes) are classified as residential rental property under IRS rules and depreciate over 27.5 years. Cost segregation reclassifies components like kitchens, bathrooms, flooring, and fixtures from each of the three units into 5-year and 7-year MACRS classes. Because a triple-decker has three full sets of kitchens, bathrooms, and living spaces, the total reclassifiable amount is typically higher than a single-family rental at the same price point.

Does Massachusetts conform to federal bonus depreciation? ▼

Yes. Massachusetts has a flat 5% state income tax and conforms to federal bonus depreciation rules. This means the accelerated depreciation from a cost segregation study reduces both your federal and state tax liability. At a combined 42% rate (37% federal + 5% MA), every $100,000 reclassified saves approximately $42,000 in year-one taxes.

I live in one unit of my triple-decker and rent the other two. Can I still do cost segregation? ▼

Yes, but the study applies only to the rental portion of the property. If you occupy one of three units, roughly two-thirds of the depreciable basis qualifies for cost segregation. The owner-occupied unit is personal-use property and cannot be depreciated. When you convert to fully renting all three units, you can file a Form 3115 to catch up on the missed depreciation for the newly converted unit.