Cost Segregation on a $750K Fourplex: $132,000 in Accelerated Depreciation

A $750K fourplex benefits from four complete unit buildouts, each contributing kitchen, bathroom, and flooring components to the accelerated depreciation total.

$132,000 Accelerated Depreciation

$48,840 Est. Year-1 Tax Savings

49x Return on Study Cost

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Property Type

Purchase Price

$48,840

Estimated Year-1 Tax Savings

$132,000

Accelerated Deductions

$995

Study Cost

49x

ROI on Study

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Estimates are for illustration only. Details

What This Means for a $750,000 Fourplex

$750,000 Fourplex property — cost segregation depreciation example

A fourplex purchased for $750,000 has a depreciable basis of approximately $600,000 (80% after land). With four complete residential units, the property contains four sets of kitchens (cabinets, countertops, appliances), four bathrooms (vanities, fixtures, tile), and four units of flooring, lighting, and interior finishes — all classifiable as 5-year personal property. Cost segregation reclassifies $132,000 into accelerated MACRS classes.

With 100% bonus depreciation, the entire $132,000 is deductible in year one, generating $48,840 in federal tax savings. The study costs $995 for a fourplex, delivering a 49x return. Actual reclassification amounts vary based on the building's age, construction type, and condition of individual units.

Fourplexes depreciate on the 27.5-year residential schedule (1-4 units qualify as residential rental property). The passive activity loss rules apply: rental losses are passive unless the investor qualifies as a Real Estate Professional. For house-hackers occupying one unit, the full property basis remains depreciable — cost segregation applies to all four units regardless of owner occupancy.

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

$132,000 total reclassified into shorter recovery periods

5-Year Property $72,600

55%

7-Year Property $13,200

10%

15-Year Property $46,200

35%

Estimated Year-1 Tax Savings $48,840

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

Method

Year-1 Deduction

Difference

Standard (27.5yr straight-line)

$21,818

—

With Cost Segregation + Bonus

$132,000

+$110,182

Estimated deduction based on typical cost segregation allocations for fourplex 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 Fourplexes

A fourplex is the largest residential multifamily property type that qualifies for conventional residential financing (1-4 units). Four complete unit buildouts mean four kitchens, four bathrooms, and four sets of interior finishes — maximizing the personal property inventory that can be reclassified into the 5-year MACRS class.

The 7-year class captures per-unit and shared mechanical equipment: HVAC systems, water heaters, dedicated electrical circuits, and building systems. The 15-year class includes site improvements that scale with property size: parking areas, walkways, fencing, landscaping, exterior lighting, and signage.

With 100% bonus depreciation, every reclassified dollar is deductible in year one. Fourplex investors benefit from the highest component density of any residential property type — more depreciable components per dollar of purchase price than single-family or smaller multifamily.

Who This Example Applies To

Fourplex property investors (owner-occupied or fully rented)
Investors using residential financing for small multifamily
Portfolio builders targeting 1-4 unit properties
Investors in the 24-37% federal bracket

Passive loss rules apply to long-term rentals. Real Estate Professional status (750+ hours/year) removes passive loss limitations. Actual results depend on unit configuration, finish quality, and property age.

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Compare: Fourplex at Different Price Points

Price	Accelerated	Tax Savings	Study Cost	ROI
$600K	$105,600	$39,072	$995	39x
$750K	$132,000	$48,840	$995	49x

Compare: $750,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Airbnb / Short-Term Rental	$180,000	$66,600	$795	84x
Rental Property	$120,000	$44,400	$795	56x
Fourplex	$132,000	$48,840	$995	49x

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.

Why are duplexes especially good for cost segregation? ▼

Duplexes contain two complete sets of kitchens, bathrooms, appliances, and fixtures — doubling the personal property inventory compared to a single-family home at the same price. This means a higher percentage of the property's depreciable basis falls into accelerated MACRS classes. The IRS allows depreciation on the entire property as long as at least one unit is rented.

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.