Las Vegas, NV · $1.6M
Full-service restaurant with kitchen rebuild
Year-1 federal benefit
$185,000
Restaurant
Restaurant cost segregation: $80K–$280K Year-1 deductions.
Walk-in coolers, hood systems, grease traps, point-of-sale wiring, decorative finishes. Restaurants have the densest commercial reclassification of any property type.
The 30-second answer
Restaurant cost segregation is an engineering-based study that reclassifies a restaurant's components out of the default 39-year commercial schedule into faster 5-, 7-, and 15-year MACRS classes. It fits owners who bought a restaurant with its kitchen in place or built one out, because a restaurant is mostly specialty equipment and trade fixtures rather than building — kitchen exhaust hoods, walk-in coolers, bar refrigeration, draft and glycol lines, decorative dining lighting, booth seating, and branded finishes are 5-year personal property, and the parking and patio are 15-year land improvements. That matters because, with 100% bonus depreciation, the reclassified amount (about 30–43% of building basis, the densest of any commercial type when the kitchen and bar are documented) is deductible in Year 1. A study identifies and documents these assets; it does not assume them.
Restaurant cost segregation reclassifies 30–43% of depreciable basis from the 27.5- or 39-year shell into 5-, 7-, and 15-year MACRS classes per 26 U.S.C. § 168 and Rev. Proc. 87-56. Under OBBBA's permanent 100% bonus depreciation (placed-in-service 2025+), reclassified components are deductible in year one. All credible cost-seg providers use the same federal framework — industry-standard 2026 construction cost data, MACRS classification, IRS Audit Techniques Guide (Pub 5653) compliance. What differs across property types is land-allocation share, FF&E weight, and material-participation eligibility under §469.
| Property type | Reclass to 5/7/15-yr | Year-1 federal benefit | Study cost |
|---|---|---|---|
| STR | 20–28% | $20K–$80K | From $495 |
| SFR | 16–22% | $15K–$50K | From $495 |
| Condo | 14–18% | $10K–$35K | From $495 |
| Duplex | 20–25% | $18K–$55K | From $795 |
| Fourplex | 22–26% | $30K–$90K | From $795 |
| Office | 16–22% | $40K–$150K | From $1,995 |
| Retail | 24–30% | $50K–$180K | From $1,995 |
| Industrial | 16–25% | $30K–$120K | From $2,495 |
| Self-storage | 20–26% | $45K–$370K | From $2,495 |
| Medical office | 26–38% | $60K–$220K | From $2,495 |
| Mixed-use | 24–30% | $45K–$200K | From $1,995 |
| Multifamily | 22–26% | $25K–$80K | From $795 |
| Multifamily 5+ | 24–30% | $60K–$300K | From $1,995 |
| Triplex | 22–25% | $22K–$70K | From $795 |
| Restaurant this page | 30–43% | $80K–$280K | From $2,495 |
| Vet | 22–28% | $45K–$175K | From $2,495 |
| Gym | 19–35% | $45K–$250K | From $2,495 |
| Dealership | 30–48% | $300K–$1M | From $2,495 |
| ADU | 20–28% | $8K–$30K | From $495 |
| Commercial | 22–32% | $40K–$200K | From $1,995 |
| Data center | 45–60% | $600K–$3.4M | $4,995–$54,995 (sub-$100M); $100M+ by proposal |
| Senior living | 20–30% | Custom-scoped | By proposal |
Reclassification ranges from internal benchmarks across 4,000+ studies; Year-1 federal benefit assumes 37% bracket and full first-year usability. Study costs are Cost Seg Smart pricing — comparable engineering studies elsewhere range $5,000–$15,000+. See full provider comparison.
Real examples
What restaurant cost seg looks like in practice.
Estimates assume 37% federal bracket and full first-year usability of the loss (active income offset or REPS). Your actual benefit varies with bracket, basis allocation, and CPA's treatment.
Good fit when…
- ✓Owner-operators who paid for the kitchen and front-of-house build-out
- ✓Properties with significant outdoor patio, signage, parking
Skip it when…
- ×Vanilla shell rentals where the operator funded the build-out
Estimate
Run the numbers on your restaurant.
Pre-set to Restaurant defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$44,030
on $119,000 of accelerated deductions
Want this in writing for your CPA? Get a 1-page analysis →5-yr15-yr27.5/39-yr
Study cost
$1,995
ROI on study
22×
Delivery
< 1 hour
Estimate based on industry-standard 2026 construction cost data and IRC §168(k). Your actual result varies with property age, condition, and basis allocation.
Frequently asked
Restaurant cost segregation, by question.
Do restaurants qualify for cost segregation?
Yes — restaurants are one of the property types that benefit most, because so much of a restaurant is specialty equipment and trade fixtures rather than building. Kitchen exhaust hoods, walk-in coolers, bar refrigeration, decorative lighting, booth seating, and branded finishes are 5-year personal property when you own them and they are documented; the parking and patio are 15-year land improvements. A full-service restaurant commonly reclassifies 30–43% of basis.
Are commercial kitchen hoods and walk-in coolers 5-year property?
Generally yes. A kitchen exhaust hood, its fire suppression and dedicated make-up air, and freestanding walk-in coolers and freezers serve identifiable cooking equipment and are typically depreciated over 5 years rather than 39. IRS Publication 5653 addresses restaurant property directly; the classification of any specific asset depends on its facts and is confirmed in the study.
I lease my space and paid for the build-out — does it still apply?
Yes, and it is often even stronger. A tenant who funded the kitchen and dining build-out depreciates that investment, and with no land or 39-year shell to strip out, a restaurant build-out reclassifies far more of its cost. That is handled as a tenant-improvement study on your build-out basis.
How much does a restaurant cost segregation study cost?
Restaurants are priced as standard commercial property: from $1,995 for a sub-$1M basis and $3,295 for a $1M–$3M restaurant, delivered as a CPA-ready PDF in under an hour. No site visit required.
I bought my restaurant years ago — is it too late?
No. A lookback study lets you claim missed depreciation via Form 3115 on your current-year return under the IRS automatic-consent procedures, with no amended returns. The cumulative catch-up flows through in a single year.
Regulation references
The rules that govern restaurant cost segregation.
- Real estate professional status (REPS) — the 750-hour and 51% tests under 26 U.S.C. § 469(c)(7), and the seven material participation tests under Treas. Reg. § 1.469-5T. Required to offset W-2 income with long-term rental losses unless the property qualifies under the STR loophole.
- Form 3115 (catch-up depreciation) — how to apply cost segregation to a property placed in service in a prior year. Full § 481(a) catch-up adjustment, automatic change-number 7, no IRS user fee.
- Treas. Reg. § 1.469-1T — full reference — all six (A)–(F) exceptions that reclassify a rental as non-rental for passive activity loss purposes.
- Regulations hub — full canonical reference for all cost segregation regulations.
- irsdepreciationrules.com — companion plain-language reference for the underlying IRS depreciation statutes (operated by Cost Seg Smart).