Free Cost Segregation Template (Excel)

This is a planning estimate, not a professional cost segregation study

Read this before the rest: a real cost segregation study is an engineering-based analysis performed by a qualified firm, and its output is what you'd actually file with the IRS. This template is a directional estimator to help you see whether cost segregation is worth pursuing - it is not tax advice and it is not a substitute for that professional study.

Use it to get a rough sense of the potential year-one benefit before you pay for an engineering study, or to sanity-check a quote you've already received. Confirm any real allocation and depreciation treatment with your CPA or a cost segregation specialist.

What's inside: component allocation by depreciation class

The Component Allocation sheet has 40 rows for listing building components - flooring, cabinetry, specialty electrical, site improvements, and so on - and assigning each one to a depreciation class: 5-year, 7-year, 15-year, 27.5-year, or 39-year property.

As soon as you enter a component's dollar allocation and its class, the sheet computes that component's annual straight-line depreciation, and the summary totals your allocated dollars by class across the whole property.

Typical allocations from published cost segregation studies run roughly 10-25% of building value into 5-year property and 5-15% into 15-year property, as a starting reference point - your actual property may allocate very differently.

The Savings Estimator: year-one accelerated depreciation vs. straight-line

The Savings Estimator is a separate tab where you enter your building value, your marginal tax rate, and the bonus depreciation percentage that applies. You also copy over the total dollars allocated to the short-life classes (5/7/15-year) from the Allocation sheet.

From those inputs, it calculates a year-one straight-line-only baseline, a year-one figure with cost segregation and bonus depreciation applied, the additional year-one deduction that creates, and an estimated year-one tax deferral based on your tax rate.

Note that the class totals move between the two sheets by copy-paste, not an automatic link - you read the short-life total off the Allocation sheet and type it into the Savings Estimator input. That keeps each tab simple to audit on its own.

Who this template is for

Real estate investors weighing whether a cost segregation study is worth commissioning on a rental or commercial property, and want a first-pass estimate of the potential year-one tax benefit before paying for the engineering study.

It's also useful for investors comparing several properties at once - run the same rough allocation and tax rate assumptions across a few buildings to see which ones might justify the cost of a full study first.