Childcare cost segregation

Daycare and preschool buildings have more 15-year property than people realize.

Purpose-built childcare facilities are dense in qualifying short-life property — playgrounds, fencing, dedicated kitchens, child-scale millwork, and exterior site work. TDA's engineering-based study captures every component and typically reclassifies 25–35% of basis.

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Childcare & education facilities

Child-safe finishes and specialty fixtures reclassify into 5- and 7- year buckets.

Childcare facilities concentrate FF&E and specialty assets: child-height plumbing, age-segregated room MEP, playground equipment, security access systems, kitchen equipment, durable wall coverings. Typical reclassification: 22–32% of basis.

Particularly attractive for owner-operators who’ve recently acquired or built a center — the deductions front-load to year one under OBBBA bonus rules.

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Colorful outdoor play area at a childcare center, with slides, climbing equipment and toy vehicles on a green lawn beside a yellow childcare building under a blue sky

Owner-operator focusCost seg accelerates the ROI on recently-built or acquired childcare centers.

What we reclassify in a childcare center

15-year land improvements

Playground equipment, surfacing, and shade structures
Perimeter fencing and security gating
Parking lot, drop-off lanes, ADA accessibility
Site lighting and signage
Outdoor learning structures and water features

5-year personal property

Dedicated kitchen equipment and serving lines
Laundry equipment
Decorative classroom finishes and themed millwork
Cubbies, child-scale built-ins
AV systems and educational technology

Reclassification benchmark

Childcare centers typically reclassify 25–35% of basis. Centers with extensive playgrounds and outdoor programming reach the upper end.

Childcare pool	Typical %
39-year real property	65–75%
15-year land improvements / QIP	15–25%
5-year personal property	8–15%

Sample — $2.8M childcare facility

~$700,000

First-year deduction with 28% reclassification on $2.5M depreciable basis under 100% bonus.

FAQ

Childcare cost segregation, answered

Why are childcare centers good cost-seg candidates?

Purpose-built childcare facilities have substantial site improvements (playground, fencing, parking, signage) and dedicated interior systems (kitchen, laundry, bathroom millwork sized for children). These reclassify well — typically 25–35% of basis.

What about national franchise centers?

Franchised childcare centers (KinderCare, Goddard, Primrose, etc.) follow brand-standard buildouts that include extensive playground systems, themed interior finishes, and dedicated learning-environment construction. The brand spec sheet often makes the cost segregation easier because items are clearly itemized.

What about home-based daycares?

Home-based daycares are typically too small for cost segregation to be economical. The depreciable basis would need to be substantial (commercial conversion of a residence with significant improvements) before a study makes sense.

Daycare and preschool buildings have more 15-year property than people realize.

Child-safe finishes and specialty fixtures reclassify into 5- and 7- year buckets.

What we reclassify in a childcare center

15-year land improvements

5-year personal property

Reclassification benchmark

Childcare cost segregation, answered

Free feasibility on your childcare facility