Austin, TX · $640K
House-hacked, 50% basis allocated to rental side
Year-1 federal benefit
$28,400
Duplex
Duplex cost segregation: $31K–$105K Year-1 deductions.
House-hackers: only the rental side gets cost-segregated. Owner-occupied half stays on personal residence rules.
The 30-second answer
Duplex cost segregation is an engineering-based study that reclassifies a two-unit rental's components out of the default 27.5-year residential schedule into faster 5- and 15-year MACRS classes. A duplex reclassifies in line with a single-family rental — typically 13–21% of building basis: the doubled unit fixtures (two kitchens, two sets of appliances, often two HVAC systems) offset the single shared driveway, landscaping, and site work. With 100% bonus depreciation that amount is deductible in Year 1. If you house-hack (live in one half), only the rental-side basis is eligible, allocated by square footage; the loss is passive under IRC §469 unless you qualify as a real estate professional or materially participate.
Duplex cost segregation reclassifies 13–21% 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 — industry-standard 2026 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.
| Property type | Reclass to 5/7/15-yr | Year-1 federal benefit | Study cost |
|---|---|---|---|
| STR | 19–39% | $45K–$280K | From $495 |
| SFR | 5–32% | $10K–$165K | From $495 |
| Condo | 10–17% | $18K–$68K | From $495 |
| Brownstone | 5–20% | $60K–$640K | From $495 |
| Rowhouse | 5–18% | $10K–$170K | From $495 |
| Duplex this page | 13–21% | $31K–$105K | From $995 |
| Fourplex | 14–29% | $56K–$230K | From $995 |
| Office | 16–29% | $84K–$650K | From $1,995 |
| Retail | 20–37% | $90K–$690K | From $1,995 |
| Industrial | 15–28% | $78K–$840K | From $2,495 |
| Self-storage | 19–36% | $140K–$1.6M | From $2,495 |
| Medical office | 16–29% | $84K–$540K | From $2,995 |
| Mixed-use | 12–23% | $63K–$515K | From $1,995 |
| Multifamily | 14–28% | $44K–$200K | From $995 |
| Multifamily 5+ | 14–26% | $110K–$1.0M | From $1,995 |
| Triplex | 14–26% | $44K–$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 | 25–47% | $465K–$4.2M | From $2,995 |
| ADU | 7–14% | $8K–$39K | From $495 |
| Commercial | 18–34% | $94K–$765K | From $1,995 |
| 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 |
Reclassification ranges from internal benchmarks across 4,000+ studies; 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.
Real examples
What duplex cost seg looks like in practice.
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…
- ✓Pure-rental duplexes (both units rented out)
- ✓Owner-occupied house-hackers, but only the rental-side basis is eligible
- ✓Duplexes with separate mechanicals per unit (more 5/15-yr property)
Skip it when…
- ×Owner-occupied duplexes where you live in both halves
- ×Duplexes under $250K basis where the math gets thin
Estimate
Run the numbers on your duplex.
Pre-set to Duplex defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$26,640
on $72,000 of accelerated deductions
Want this in writing for your CPA? Get a 1-page analysis →5-yr15-yr27.5/39-yr
Study cost
$1,295
ROI on study
21×
Delivery
< 1 hour
Estimate based on industry-standard 2026 construction cost data and IRC §168(k). Your actual result varies with property age, condition, and basis allocation.
Frequently asked
Duplex cost segregation, by question.
Do duplexes qualify for cost segregation?
Yes — typically 13–21% of basis, in line with a single-family rental: the doubled unit fixtures (two kitchens, two appliance sets, often two HVAC systems) offset the single shared driveway and site work. The whole reclassified amount is deductible in Year 1 under 100% bonus depreciation.
I live in half my duplex — can I still do this?
Yes, but only the rental-side basis is eligible. The study allocates basis by square footage between your owner-occupied half (personal residence, not depreciable) and the rented half, and cost-segregates only the rental portion. The owner-occupied half stays on personal-residence rules.
How much does a duplex cost segregation study cost?
Duplexes are priced on the multifamily 2–4 tier: from $995 for a sub-$300K property, $1,295 for $300K–$700K, and $1,495 up to $1M, delivered as a CPA-ready PDF, usually the same business day.
Regulation references
The rules that govern duplex 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).
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