Cost Segregation on a $500K Triplex: $88,000 in Accelerated Depreciation

Three complete units means three kitchens, three bathrooms, and three times the reclassifiable building components — making triplexes a cost segregation sweet spot.

$88,000 Accelerated Depreciation

$32,560 Est. Year-1 Tax Savings

33x Return on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

$32,560

Estimated Year-1 Tax Savings

$88,000

Accelerated Deductions

$995

Study Cost

33x

ROI on Study

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Estimates are for illustration only. Details

What This Means for a $500,000 Triplex

$500,000 Triplex property — cost segregation depreciation example

A $500K triplex is one of the most efficient property types for cost segregation. With three complete units, you get triple the personal property inventory — three kitchens with cabinets, countertops, and appliances; three bathrooms with vanities, fixtures, and tile; and three sets of flooring, lighting, and interior finishes. The study typically reclassifies $88K into accelerated MACRS classes.

The triplex also benefits from common-area components: shared entryways, exterior lighting, mailbox installations, parking area paving, shared HVAC or boiler systems, and landscaping. These fall into the 7-year or 15-year MACRS classes and add meaningfully to the total accelerated depreciation.

For house-hackers who live in one unit and rent the other two, cost segregation applies to the entire property basis — not just the rented units. At $500K with $88K in accelerated depreciation, you're looking at about $33K in first-year tax savings against a study cost of $995. That's a 33x return, and the deductions can offset rental income from all three units or carry forward to future years.

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

$88,000 total reclassified into shorter recovery periods

5-Year Property $48,400

55%

7-Year Property $8,800

10%

15-Year Property $30,800

35%

Estimated Year-1 Tax Savings $32,560

Illustrative estimate. Final allocations vary based on property facts and report findings.

Method

Year-1 Deduction

Difference

Standard (27.5yr straight-line)

$14,545

—

With Cost Segregation + Bonus

$88,000

+$73,455

Estimated deduction based on typical cost segregation allocations for triplex properties. Actual study results may vary based on property-specific analysis including age, condition, renovations, and local construction costs.

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Why Cost Segregation Works for Triplexes

A triplex contains three complete unit buildouts — three kitchens, three bathrooms, three sets of flooring, lighting, and interior finishes. This tripled inventory of personal property creates a strong reclassification profile under MACRS. Each unit's cabinetry, countertops, appliances, and fixtures qualify as 5-year property.

Shared building systems and common areas add to the reclassifiable total. HVAC equipment, water heaters, electrical panels, entry systems, mailbox installations, parking areas, and landscaping all fall into shorter recovery classes than the default 27.5-year residential schedule.

With 100% bonus depreciation, the entire accelerated amount is deductible in year one. The larger unit count means more depreciable components per dollar of purchase price compared to single-family rentals.

Who This Example Applies To

Triplex property investors
House-hackers occupying one unit while renting two
Small multifamily investors (1-4 units, residential financing)
Investors in the 24-37% federal bracket

Passive loss rules apply unless you qualify as a Real Estate Professional. Actual reclassification amounts depend on unit finish levels, property age, and local construction costs.

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Compare: $500,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Airbnb / Short-Term Rental	$120,000	$44,400	$795	56x
Rental Property	$80,000	$29,600	$795	37x
Duplex	$88,000	$32,560	$995	33x
Condo	$68,000	$25,160	$795	32x
Triplex	$88,000	$32,560	$995	33x

Frequently Asked Questions

What is a cost segregation study? ▼

A cost segregation study is an engineering-based analysis that reclassifies components of your property into shorter IRS depreciation categories (5, 7, and 15 years) instead of the default 27.5 or 39 years. This accelerates your depreciation deductions, reducing your tax bill in the early years of ownership.

What components get reclassified in a multifamily property? ▼

Multifamily properties have per-unit components (kitchens, bathrooms, flooring, fixtures) plus common-area improvements (hallway lighting, entry systems, mailboxes, parking lots, laundry equipment, security systems). Both categories qualify for accelerated MACRS classification, making multifamily properties especially rich in reclassifiable components.

How long does a cost segregation study take? ▼

Our studies are delivered in 3-5 business days. You provide the property address, purchase price, and closing date — we handle everything else using assessor records, satellite imagery, and construction cost databases. No site visit or tenant disruption required.