$600K Fourplex: Your Cost Segregation Breakdown

Four units, four kitchens, four bathrooms — a fourplex maximizes the residential cost segregation benefit at the largest scale before crossing into commercial territory.

$91,200 Accelerated Depreciation

$33,744 Est. Year-1 Tax Savings

34x Return on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

Depreciable Basis (80%) $480,000

Accelerated Depreciation $91,200

Est. Year-1 Tax Savings $33,744

Study Cost $995

Return on Study 34x

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MACRS Depreciation Breakdown

MACRS Class	Amount	% of Accelerated	Bonus Eligible
5-Year Property	$51,072	56%	Yes — 100%
7-Year Property	$11,856	13%	Yes — 100%
15-Year Property	$28,272	31%	Yes — 100%
27.5yr Property	$388,800	81%	No — standard schedule
Total Depreciable Basis	$480,000	100%	—

Method	Year-1 Deduction	Difference
Standard Straight-Line (27.5yr)	$17,455	—
With Cost Segregation + Bonus	$91,200	+$73,745

Estimated deduction based on typical cost segregation allocations for fourplex 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 $600K fourplex represents the largest residential multifamily property type (1-4 units qualify for residential financing) — and it's exceptionally well-suited for cost segregation. Four complete unit buildouts mean four sets of kitchens, bathrooms, HVAC equipment, flooring, fixtures, and lighting. The study typically reclassifies $100K+ into accelerated MACRS classes.

The 5-year component share in a fourplex is robust: per-unit cabinets, countertops, appliances, carpet, vinyl flooring, bathroom vanities, light fixtures, and ceiling fans across all four units. The 7-year class captures dedicated HVAC equipment, water heaters, and certain electrical systems. And the 15-year class includes parking areas, walkways, fencing, landscaping, and exterior lighting — components that scale with property size.

At $600K, the first-year tax savings from cost segregation approach $37K against a study cost of $995. For portfolio investors who own multiple small multifamily properties, running cost segregation on each building creates stacking depreciation benefits that can shelter the majority of rental income. Combined with 100% bonus depreciation, the entire reclassified amount is deductible in year one.

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Compare: $600,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Airbnb / Short-Term Rental	$163,200	$60,384	$795	76x
Rental Property	$86,400	$31,968	$795	40x
Fourplex	$91,200	$33,744	$995	34x

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.

What components get reclassified in a multifamily property? ▼

Multifamily properties have per-unit components (kitchens, bathrooms, flooring, fixtures) plus common-area improvements (hallway lighting, entry systems, mailboxes, parking lots, laundry equipment, security systems). Both categories qualify for accelerated MACRS classification, making multifamily properties especially rich in reclassifiable components.

Can I use cost segregation deductions against my W-2 income? ▼

For long-term rentals, depreciation deductions are generally passive and can only offset passive income. However, there are two key exceptions: (1) if your AGI is under $150K, you can deduct up to $25K in passive losses against ordinary income, and (2) if you qualify as a Real Estate Professional (750+ hours/year in real estate), all rental income becomes non-passive. STR owners who materially participate can deduct against W-2 income regardless.