What Is Cost Segregation for a Triplex?
Cost segregation reclassifies portions of your triplex from the standard 27.5-year residential depreciation schedule into shorter MACRS recovery periods of 5, 7, and 15 years. This is a recognized IRS strategy based on engineering analysis of each building component, and it applies to any income-producing residential property, including 3-unit buildings.
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Triplexes present a compelling case for cost segregation because of the sheer volume of duplicated interior systems. Three separate kitchens, three sets of bathroom fixtures, three units of flooring, cabinetry, and appliances all contribute to the reclassifiable total. Add in shared hallways, stairways, exterior improvements, and parking, and a triplex often yields a higher absolute dollar amount of accelerated depreciation than a single-family rental at the same price point.
With 100% bonus depreciation restored permanently under the One Big Beautiful Bill Act, triplex investors can claim the full reclassified amount as a first-year deduction. On a $500K triplex, that typically translates to $30,000-$55,000 in accelerated deductions.
Triplex Components That Qualify for Accelerated Depreciation
Each of the three units in a triplex contributes its own set of shorter-life assets. A cost segregation study identifies and values every qualifying component:
5-Year Property: Appliances in each unit (stoves, refrigerators, dishwashers, microwaves), carpeting and resilient flooring, window coverings, cabinetry and countertops, bathroom vanities and mirrors, interior lighting fixtures, ceiling fans, and in-unit laundry equipment. If any units are furnished for short-term rental use, all furniture, linens, and electronics are also 5-year property.
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7-Year Property: Built-in shelving, specialty plumbing fixtures, intercom or buzzer systems, and certain removable wall finishes.
15-Year Property: Parking areas and driveways, sidewalks, exterior stairways and railings, retaining walls, fencing, landscaping with irrigation, outdoor lighting, and shared yard drainage systems. For triplexes on larger lots, site improvements can represent 8-12% of the total depreciable basis on their own.
In total, 25-35% of a triplex's depreciable basis typically qualifies for accelerated depreciation. Properties built before 2000 or those with recently renovated unit interiors tend to land at the higher end, because older buildings have more clearly separable components and renovations often introduce additional personal property.
Why Triplex Owners Order Cost Segregation Studies
Three units compound the tax benefit. The math is straightforward: three kitchens, three bathrooms, and three sets of flooring and finishes means roughly three times the 5-year property compared to a single unit. This makes the cost of the study a smaller fraction of the total benefit, improving the return on investment. Most triplex owners see a 5x-10x return on the study cost in first-year tax savings alone.
House hackers benefit too. If you use a house hacking strategy and live in one unit while renting the other two, cost segregation still applies to the rental portion of the property. The reclassified depreciation is prorated based on the percentage used for rental activity. A triplex where two-thirds is rented means two-thirds of the accelerated deduction is available.
Catch up on prior years with a lookback study. Bought your triplex years ago without a cost seg study? Form 3115 lets you claim all cumulative missed accelerated depreciation in a single year. No amended returns required.
Fast, affordable, and CPA-ready. Our studies start at $995 for triplexes and are delivered in under one hour as a 40+ page PDF with component-level depreciation schedules, IRS asset class citations, and engineering narratives. Your CPA can file directly from the report. See a $500K triplex example for a full breakdown.
