Tampa, FL · $1.6M
Strip center, 6 tenants
Year-1 federal benefit
$118,500
Retail
Retail cost segregation: $50K–$180K Year-1 deductions.
Storefront finishes, signage, parking lots, and specialty fixtures push retail reclassification higher than office.
The 30-second answer
Retail cost segregation reclassifies 26–32% 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 — RSMeans 2026 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 | 20–28% | $20K–$80K | From $495 |
| SFR | 16–22% | $15K–$50K | From $495 |
| Condo | 14–18% | $10K–$35K | $495–$1,495 |
| Duplex | 20–25% | $18K–$55K | $995–$1,995 |
| Fourplex | 22–26% | $30K–$90K | $995–$1,995 |
| Office | 25–32% | $40K–$150K | $995–$2,995 |
| Retail this page | 26–32% | $50K–$180K | $995–$2,995 |
| Industrial | 16–24% | $30K–$120K | $995–$2,995 |
| Medical office | 30–38% | $60K–$220K | $995–$2,995 |
| Mixed-use | 24–30% | $45K–$200K | $995–$2,995 |
| Multifamily | 22–26% | $25K–$80K | $995–$1,995 |
| Multifamily 5+ | 24–30% | $60K–$300K | $995–$2,995 |
| Triplex | 22–25% | $22K–$70K | $995–$1,995 |
| Restaurant | 32–40% | $80K–$280K | $995–$2,995 |
| ADU | 20–28% | $8K–$30K | $495–$995 |
| Commercial | 22–32% | $40K–$200K | $995–$2,995 |
| Data center | 45–60% | $600K–$3.4M | $4,995–$29,995 sub-$25M; hyperscale from $49,995 |
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 retail 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…
- ✓Strip centers with significant parking and signage
- ✓Restaurant/retail tenants with specialty MEP
- ✓Owners considering 1031 exchange — pre-sale study locks in the depreciation profile
Skip it when…
- ×Unfinished shells with no completed tenant build-outs
Estimate
Run the numbers on your retail.
Pre-set to Retail defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$44,030
on $119,000 of accelerated deductions
Want this in writing for your CPA? Get a 1-page analysis →5-yr15-yr27.5/39-yr
Study cost
$1,995
ROI on study
22×
Delivery
< 1 hour
Estimate based on RSMeans 2026 cost data and IRC §168(k). Your actual result varies with property age, condition, and basis allocation.
Regulation references
The rules that govern retail 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).