$1.2M Rental: Your Cost Segregation Breakdown

Q: What is the study cost for a $1.2M rental property?

The study costs $1,295 for properties between $1M and $2M. At $1.2M, you can expect roughly $172,800 in accelerated depreciation and $115,085 in year-one tax savings.

Q: Can I do cost segregation on a property I bought years ago?

Yes. A look-back study allows you to catch up on missed accelerated depreciation in a single year by filing Form 3115 with your tax return. No amended returns needed.

Q: How does cost segregation work with 100% bonus depreciation?

Under current law (OBBBA, signed July 2025), all 5-year, 7-year, and 15-year property identified in your study qualifies for 100% bonus depreciation — meaning the entire accelerated amount is deductible in year one.

At $1.2M, cost segregation reclassifies $172,800 into accelerated depreciation categories — generating nearly $64K in year-one tax savings.

$172,800Accelerated Depreciation

$63,936Est. Year-1 Tax Savings

49xReturn on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

$115,085

Estimated Year-1 Tax Savings

$172,800

Accelerated Deductions

$1,295

Study Cost

49x

ROI on Study

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Estimates are for illustration only. Details

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

Total reclassified from standard depreciation

5-Year Property$103,680

10.8%

7-Year Property$19,200

2.0%

15-Year Property$49,920

5.2%

27.5-Year Property$787,200

82.0%

Estimated Year-1 Tax Savings$115,085

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

Estimated deduction based on typical cost segregation allocations for single-family rental properties. Actual study results may vary.

What This Means for You

$1.2M premium rental property with cost segregation study showing $172K in accelerated deductions

A $1.2M rental property is common in coastal California, suburban D.C., or premium neighborhoods in Denver and Seattle. These are typically 4-5 bedroom, 3,000+ SF homes with high-quality construction, extensive landscaping, and upgraded finishes throughout.

At this price point, the component base is substantial. Premium kitchens with custom cabinets, stone countertops, and high-end appliances contribute significant 5-year depreciation. Extensive site improvements — multi-car driveways, stone walkways, retaining walls, irrigation systems, and mature landscaping — add to the 15-year category.

The $172,800 in accelerated deductions generates 115,0856 in year-one tax savings at the 37% bracket. For properties above $1M, the study cost is $1,295 — still delivering a 49x return. If you are building a portfolio of high-value rentals, cost segregation on each property compounds these savings significantly.

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Compare: Rental Property at Different Price Points

Price	Accelerated	Tax Savings	Study Cost	ROI
$900K	$129,600	$47,952	$795	60x
$1M	$144,000	$53,280	$1,295	41x
$1.2M	$172,800	$63,936	$1,295	49x
$1.5M	$216,000	$79,920	$1,295	62x

Frequently Asked Questions

What is the study cost for a $1.2M rental property?▼

The study costs $1,295 for properties between $1M and $2M.

Can I do cost segregation on a property I bought years ago?▼

Yes. A look-back study lets you catch up on missed accelerated depreciation in a single year by filing Form 3115. No amended returns needed.

How does cost segregation work with 100% bonus depreciation?▼

Under the OBBBA (signed July 2025), all 5-year, 7-year, and 15-year property qualifies for 100% bonus depreciation — the entire accelerated amount is deductible in year one.