Resort hotel pool deck with lounge chairs in front of a wood lodge with a steep shingled roof

Hotel Cost Segregation Case Study

$1,344,000 of a $4,200,000 hotel, 32% of the cost, deducted in the first year.

Study Summary

A $4,200,000 hotel placed in service in August 2026, studied for the 2026 tax year.

Without a study, the owner would depreciate the full cost basis as 39 year property. Our engineers identified 32% of it as 5 and 15 year property. With 100% bonus depreciation, that $1,344,000 was deducted in the first year, and at a 37% tax rate it added $497,280 to the owner’s cash flow in year one.

Property type
Hotel
Cost basis
$4,200,000
Placed in service
August 2026
Tax rate
37%
Bonus depreciation
100%
  • $1,344,000

    Accelerated depreciation, deducted in year one

  • $497,280

    Additional cash flow in year one at a 37% tax rate

  • $107,692

    Year-one deduction without a study, straight-line over 39 years

  • $1,417,231

    Year-one deduction with the study, more than 13 times as much

Where the $4,200,000 Went

  • 5 year property

    Guest room furnishings, fixtures and specialty equipment

    $1,008,00024%
  • 15 year property

    Parking, walkways, landscaping, exterior lighting and site work

    $336,0008%
  • 39 year property

    The shell, roof and structure, left on the standard schedule

    $2,856,00068%

Year-one figures are simplified: straight-line divides the basis evenly over 39 years and leaves out the mid-month convention. Results depend on your property.

Cost Segregation Results by Property Type

Accelerated depreciation is the part of the price our engineers moved onto 5, 7 and 15 year schedules. Select a study to see its full numbers.