Case studies

Real cost segregation outcomes, side by side.

10 anonymized case studies across every major property class, showing the dollar-for-dollar difference between filing without and with an engineering-based cost segregation study under OBBBA 100% bonus depreciation. All numbers are typical mid-range outcomes from TDA engagements.

Multifamily

Class B garden apartment, Texas

96 units · $4.2M depreciable basis · placed in service 2025
Without cost segregation
$152,727First-year depreciation (27.5-yr straight-line)
  • Federal tax saved at 37% bracket: ~$56,500
  • Deduction recovered slowly over 27.5 years
  • No bonus depreciation captured
With TDA cost segregation
$1,176,000First-year deduction (28% reclassified)
  • 5-year property: $462K (carpet, appliances, lighting)
  • 15-year property: $714K (paving, landscaping, pool)
  • Federal tax saved at 37% bracket: ~$435,000
Net additional cash in year one: ~$378,500

Site-improvement-heavy lot drove an above-average reclassification ratio. Owner used the year-one deduction to offset gains from a separate property sale, eliminating capital gains tax entirely.

Hospitality

Limited-service hotel, Florida coast

110 keys · $7.5M depreciable basis · placed in service 2025
Without cost segregation
$192,308First-year depreciation (39-yr SL)
  • Federal tax saved at 37%: ~$71,200
  • FF&E and decorative finishes lumped into 39-year recovery
  • Misses one of the richest reclassification profiles available
With TDA cost segregation
$2,892,000First-year deduction (36% reclassified)
  • 5-year property: $2.1M (FF&E, decorative lighting, kitchen)
  • 15-year property: $792K (paving, signage, landscape)
  • Federal tax saved at 37%: ~$1,070,000
Net additional cash in year one: ~$998,800

Hotels routinely produce the highest reclassification ratios in cost segregation. The decorative finishes and FF&E across 110 rooms drove the 36% reclassification — a near-million-dollar swing in cash tax saved.

Short-Term Rental

Lakefront vacation rental, Smoky Mountains

5 BR luxury cabin · $640K depreciable basis · placed in service 2025
Without cost segregation
$23,272First-year depreciation (27.5-yr SL)
  • Federal tax saved (32% bracket): ~$7,450
  • Loss too small to meaningfully offset W-2 income
  • Misses the STR strategy multiplier effect
With TDA cost segregation
$198,400First-year deduction (31% reclassified)
  • STR strategy: avg guest stay < 7 days, host materially participates
  • Loss treated as non-passive — offsets W-2 directly
  • Federal tax saved: ~$63,500
Net additional cash in year one: ~$56,000

Owner is a high-income W-2 earner. The STR strategy + cost seg combination wiped out roughly 28% of their federal taxable income from their day job — the headline scenario for active STR hosts.

Commercial Office

Class A suburban office, Atlanta

85,000 sq ft · $9.8M depreciable basis · placed in service 2024
Without cost segregation
$502,564Two years of straight-line (39-yr)
  • Federal tax saved (37% bracket): ~$185,950
  • Structured parking and TI buildouts trapped in 39-year
With TDA cost segregation
$1,756,000Year-of-change deduction
  • 22% reclassified (parking structure, electrical, finishes)
  • Federal tax saved: ~$649,700
Net additional cash in year of change: ~$463,750
Warehouse / Industrial

Last-mile distribution, Inland Empire CA

240,000 sq ft tilt-up · $3.6M depreciable basis · placed in service 2025
Without cost segregation
$92,308First-year depreciation (39-yr SL)
  • Federal tax saved (37% bracket): ~$34,150
  • Heavy paving and process electrical lumped into 39-year
  • Yard improvements never separately classified
With TDA cost segregation
$648,000First-year deduction (18% reclassified)
  • 15-year land improvements: $540K (paving, fencing, yard lighting)
  • 5-year property: $108K (racking, dedicated process electrical)
  • Federal tax saved: ~$239,800
Net additional cash in year one: ~$205,650

Industrial reclassifies at lower percentages than hotels but the absolute dollars are still substantial — especially on properties with heavy paving and yard improvements typical of last-mile distribution.

Medical Office

Multi-tenant MOB with imaging suite, North Carolina

22,000 sq ft · $2.4M depreciable basis · placed in service 2025
Without cost segregation
$61,538First-year depreciation (39-yr SL)
  • Federal tax saved (37%): ~$22,770
  • Lead-shielded imaging walls and specialty plumbing trapped in 39-year
  • Misses one of the richest non-hospitality property profiles
With TDA cost segregation
$648,000First-year deduction (27% reclassified)
  • 5-year: $432K (medical gas, specialty plumbing, casework)
  • 15-year: $216K (parking, signage, exterior)
  • Federal tax saved: ~$239,800
Net additional cash in year one: ~$217,000

Medical office buildings — particularly those with imaging suites, ambulatory surgery, or lab build-outs — are one of the highest-yielding asset classes outside hospitality. Specialty plumbing and dedicated electrical drove the 27% ratio.

Restaurants & Bars

Full-service restaurant, downtown Nashville

6,200 sq ft · $1.1M depreciable basis · placed in service 2025
Without cost segregation
$28,205First-year depreciation (39-yr SL)
  • Federal tax saved (37%): ~$10,440
  • $385K of kitchen equipment lumped into 39-year recovery
  • Decorative finishes and signature interior trapped
With TDA cost segregation
$418,000First-year deduction (38% reclassified)
  • 5-year: $385K (kitchen equipment, walk-ins, hood systems)
  • 15-year: $33K (signage, exterior finishes)
  • Federal tax saved: ~$154,700
Net additional cash in year one: ~$144,250

Restaurants reclassify at the highest percentages of any asset class — sometimes pushing 45%. The kitchen build-out alone usually accounts for over a third of basis.

Residential Rental

Single-family rental portfolio (3 properties), Phoenix

$420K avg basis per property · $1.26M total · placed in service 2025
Without cost segregation
$45,818First-year depreciation (27.5-yr SL)
  • Federal tax saved (32%): ~$14,660
  • Appliances, flooring, and site work lumped into 27.5-year
  • Loss subject to passive activity rules unless real-estate-pro status
With TDA cost segregation
$252,000First-year deduction (20% reclassified)
  • 5-year: $151K (carpet, appliances, removable fixtures)
  • 15-year: $101K (driveway, landscape, fencing)
  • Federal tax saved (real-estate professional): ~$80,640
Net additional cash in year one: ~$65,980

Owner is a real-estate professional under §469(c)(7), allowing the rental losses to offset spouse’s W-2 income. Lower reclassification % than commercial but still meaningful absolute dollars.

Retail

Anchored neighborhood retail center, Charlotte NC

42,000 sq ft · $5.6M depreciable basis · placed in service 2025
Without cost segregation
$143,590First-year depreciation (39-yr SL)
  • Federal tax saved (37%): ~$53,130
  • Parking, signage, and tenant improvements trapped in 39-year
  • TI allowances paid by landlord never separately classified
With TDA cost segregation
$1,344,000First-year deduction (24% reclassified)
  • 15-year: $952K (parking lots, signage, exterior lighting)
  • 5-year: $392K (decorative finishes, dedicated tenant electrical)
  • Federal tax saved: ~$497,300
Net additional cash in year one: ~$444,170

Retail strip centers consistently reclassify in the 20–28% range. Heavy parking and exterior lighting drive most of the 15-year improvements pool.

Childcare

Suburban childcare center, Denver metro

14,500 sq ft · $1.95M depreciable basis · placed in service 2025
Without cost segregation
$50,000First-year depreciation (39-yr SL)
  • Federal tax saved (32%): ~$16,000
  • Playground equipment, fencing, signage all lumped into 39-year
  • Specialty kitchen and laundry buildouts not separately classified
With TDA cost segregation
$546,000First-year deduction (28% reclassified)
  • 15-year: $312K (playground, fencing, parking, landscape)
  • 5-year: $234K (cabinetry, decorative lighting, kitchen)
  • Federal tax saved: ~$174,720
Net additional cash in year one: ~$158,720

Childcare centers are unusually rich in 15-year land improvements (playgrounds, fencing) and 5-year personal property (cabinetry, kitchens, AV). Often overlooked but consistently strong reclassification candidates.