Family-owned funeral home, converted residence · By proposal
Chapel AV and lighting, selection room millwork, visitation finishes, service parking
Year-1 federal benefit
Custom-scoped
Funeral Home
Funeral homes cost segregation: $135K–$900K Year-1 deductions.
A funeral home is three buildings in one: a licensed preparation room, a chapel, and a parking lot sized for a procession. Each carries property that does not belong on the 39-year schedule.
The 30-second answer
Funeral home cost segregation is an engineering-based study that reclassifies a funeral home's components out of the 39-year building schedule into faster 5-, 7-, and 15-year MACRS classes. Funeral service is asset class 57.0, distributive trades and services, under Rev. Proc. 87-56, so qualifying personal property in the facility is 5-year. What typically moves is identified room by room: the preparation and embalming room (dedicated plumbing, floor drains, the ventilation and exhaust serving the process, stainless fixtures, walk-in refrigeration), the chapel (audio-visual and sound systems, decorative and accent lighting, millwork, carpet), the casket and urn selection room (display lighting, millwork, casework), visitation lounges and family rooms (furniture, kitchenette equipment, finishes), offices (furniture, data cabling), and the crematory retort with its dedicated exhaust where one is present. Site work is unusually large for the building size, because the lot is sized for a procession rather than for the building: service parking, drive lanes, site lighting, landscaping and signage are 15-year land improvements. The shell, roof, general HVAC, general electrical and general plumbing stay 39-year. An estimated 18–30% of basis reclassifies, and studies are scoped per engagement rather than self-served, so contact us for a proposal.
Funeral homes cost segregation reclassifies 18–30% 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 | 20–39% | $48K–$280K | From $495 |
| SFR | 8–32% | $16K–$165K | From $495 |
| Condo | 10–17% | $16K–$61K | From $495 |
| Brownstone | 5–20% | $60K–$640K | From $495 |
| Rowhouse | 5–18% | $10K–$170K | From $495 |
| Duplex | 13–21% | $31K–$105K | From $995 |
| Fourplex | 16–29% | $64K–$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 | 15–28% | $48K–$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 this page | 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+. See full provider comparison.
Real examples
What funeral homes 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…
- ✓Family owner-operators who hold the funeral home real estate, not just the business
- ✓Regional consolidators acquiring funeral homes, where each facility gets an acquisition-year study
- ✓Facilities owned for years, where a Form 3115 lookback can capture prior-year depreciation in the current year
Skip it when…
- ×Operators leasing the building from a consolidator or a third party, who do not own the building basis
- ×Cemetery and memorial-park land holdings, where the value sits in land, which is not depreciable
Estimate
Run the numbers on your funeral homes.
Pre-set to Funeral homes defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$26,363
on $71,250 of accelerated deductions
Want this in writing for your CPA? Get a 1-page analysis →5-yr15-yr27.5/39-yr
Study cost
$1,995
ROI on study
13×
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
Funeral homes cost segregation, by question.
Do funeral homes qualify for cost segregation?
Yes. Funeral service is asset class 57.0, distributive trades and services, under Rev. Proc. 87-56, so qualifying personal property in the facility is 5-year. A study separates the preparation room's dedicated plumbing, drains, ventilation and refrigeration, the chapel's audio-visual and lighting systems, selection room millwork and display lighting, and visitation and office furnishings from the 39-year shell, and treats the service parking, drive lanes, site lighting and landscaping as 15-year land improvements. An estimated 18–30% of basis reclassifies, on the facts of the specific facility.
Which parts of a funeral home reclassify, and which stay on the building schedule?
Reclassified, typically: the preparation and embalming room (dedicated plumbing, floor drains, the ventilation and exhaust serving the process, stainless fixtures, walk-in refrigeration), the chapel (audio-visual and sound, decorative and accent lighting, millwork, carpet), the casket and urn selection room (display lighting, millwork, casework), visitation lounges and family rooms (furniture, kitchenette equipment, finishes), offices (furniture, data cabling), and a crematory retort with its dedicated exhaust where present. Stays 39-year: the shell, the roof, and the general HVAC, electrical and plumbing serving the building as a whole. Many funeral homes are converted large residences or purpose-built single-story chapels, and in both cases that shell is the long-lived part.
Why is the site work such a large part of a funeral home study?
Because the lot is sized for a procession rather than for the building. Large service parking areas, drive lanes for vehicles forming up, site lighting, landscaping and signage are 15-year land improvements, and on a funeral home they are unusually large relative to the building footprint. That is the single most common reason a funeral home reclassifies more than an office of the same size.
How is a funeral home cost segregation study priced?
By proposal, scoped per engagement. The facilities vary widely, from a converted residence with a chapel added to a purpose-built facility with a crematory, and a consolidator acquiring several locations at once is a different scope again. Send us the property details and we will put a proposal together.
Regulation references
The rules that govern funeral homes 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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