$3M Commercial: Your Cost Segregation Breakdown

At $3M, commercial cost segregation delivers nearly $700K in accelerated depreciation — a tax benefit that fundamentally changes the investment economics.

$696,000 Accelerated Depreciation

$257,520 Est. Year-1 Tax Savings

86x Return on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

Depreciable Basis (80%) $2,400,000

Accelerated Depreciation $696,000

Est. Year-1 Tax Savings $257,520

Study Cost $2,995

Return on Study 86x

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MACRS Depreciation Breakdown

MACRS Class	Amount	% of Accelerated	Bonus Eligible
5-Year Property	$382,800	55%	Yes — 100%
7-Year Property	$104,400	15%	Yes — 100%
15-Year Property	$208,800	30%	Yes — 100%
39yr Property	$1,704,000	71%	No — standard schedule
Total Depreciable Basis	$2,400,000	100%	—

Method	Year-1 Deduction	Difference
Standard Straight-Line (39yr)	$61,538	—
With Cost Segregation + Bonus	$696,000	+$634,462

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

What This Means for You

A $3M commercial property benefits enormously from cost segregation because the default 39-year depreciation schedule means most of the building's value sits untouched for decades. Cost segregation reclassifies approximately $696K into 5-year, 7-year, and 15-year MACRS classes — generating about $258K in first-year tax savings with 100% bonus depreciation.

Commercial properties at this price point include medical office buildings, retail strip centers, small industrial warehouses, and multi-tenant office buildings. Each type has a distinctive component mix: medical offices are heavy on specialized electrical, plumbing, and built-in cabinetry (5-year class); retail has tenant improvement buildouts and signage; industrial features heavy mechanical systems and site improvements; and office buildings carry substantial HVAC, lighting, and interior finish packages.

At $3M, the study cost of $2,995 represents just over 1% of the tax benefit. Commercial investors often coordinate cost segregation with their 1031 exchange timeline — ordering the study as part of the acquisition process so the accelerated deductions are available for the first tax filing after closing.

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Compare: Commercial Property at Different Price Points

Price	Accelerated	Tax Savings	Study Cost	ROI
$2M	$464,000	$171,680	$2,995	57x
$3M	$696,000	$257,520	$2,995	86x

Frequently Asked Questions

What is a cost segregation study? ▼

A cost segregation study is an engineering-based analysis that reclassifies components of your property into shorter IRS depreciation categories (5, 7, and 15 years) instead of the default 27.5 or 39 years. This accelerates your depreciation deductions, reducing your tax bill in the early years of ownership.

Why is cost segregation more impactful for commercial properties? ▼

Commercial properties depreciate over 39 years by default — 42% longer than the 27.5-year residential schedule. This means cost segregation provides proportionally greater acceleration: reclassifying components from 39 years to 5 years represents a 34-year speedup, compared to a 22.5-year speedup for residential properties.

Is bonus depreciation available in 2026? ▼

Yes. The One Big Beautiful Bill Act permanently restored 100% bonus depreciation for property placed in service in 2025 and beyond. This means you can deduct the full amount of accelerated depreciation identified in your cost segregation study in year one.