Restaurant (Full Service) Cost Segregation
The three positions our estimate uses for this property type, the components a study itemizes in the shorter lives, and an illustrative example from our estimate engine.
Conservative
30%
of building basis excluding land
Middle of the Road
40%
of building basis excluding land
Aggressive
55%
of building basis excluding land
The shares our estimate uses for this property type. What the three positions mean
Expected reclassification range 24% to 42%, midpoint 30%
The comparative band for every property type is SmartCostSeg house judgment used to gauge an allocation against the type's own Conservative, Middle of the Road and Aggressive positions; it is not an IRS threshold, an industry percentile or a published median.
The Conservative, Middle of the Road and Aggressive percentages for Restaurant (Full Service) are transcribed verbatim from the Expectation Guide row "Restaurant"; they are planning priors, not a substitute for documentation.
An Illustrative Example
Illustrative example computed by our estimate engine: purchase price $2,000,000, land $300,000 at the engine's default share of the price, acquired and placed in service January 1, 2026, so the engine applies a 100% bonus rate. The price and the land share are inputs for this example, not figures for this property type. Results vary with property specifics and your tax situation.
The estimate keeps the building on its 39 year life.
Building basis $1,700,000. First year depreciation without a study $43,590.
| Measure | Conservative | Middle of the Road | Aggressive |
|---|---|---|---|
| Share of the building basis moved | 30% | 40% | 55% |
| Moved to shorter lives | $510,000 | $680,000 | $935,000 |
| First year depreciation with a study | $540,513 | $706,154 | $954,615 |
| Additional first year deduction | $496,923 | $662,564 | $911,025 |
The Middle of the Road position, by class
- Modeled in the 5 year class$453,333
- Modeled in the 15 year class$226,667
- Building on its 39 year life$1,020,000
First year federal tax savings at each bracket, Middle of the Road
- At the 24% federal bracket: $159,015
- At the 32% federal bracket: $212,020
- At the 35% federal bracket: $231,897
- At the 37% federal bracket: $245,149
Federal income tax only. Your CPA confirms your bracket and any state effect.
These savings assume the full deduction can be used this year. Whether it can depends on your tax situation, including the passive activity rules, and your CPA decides. What a passive activity is
What Usually Moves to Shorter Lives
The components a study itemizes in the shorter lives for this kind of building, and confirms on your property. The example above splits by class only.
Itemized in the 5 year class
- Commercial kitchen equipment and connections
- Commercial kitchen hoods, exhaust and make-up air
- Electrical branch circuits and outlets dedicated to equipment
- Plumbing connections dedicated to equipment and appliances
- Carpet, vinyl and other removable floor coverings
- Decorative and accent lighting fixtures
- Bar and decorative millwork
- Low-voltage security, access-control and data cabling
- Miscellaneous removable finishes and accessories
Itemized in the 15 year class
- Parking lot paving, curbs and striping
- Sidewalks and exterior hardscape
- Landscaping, shrubbery and planting beds
- Site drainage, storm structures and retention
- Fencing, gates and retaining walls
- Site and parking-lot lighting (poles, bases, circuits)
What moves your number
- Kitchen build-out
- Bar
- Décor millwork
- Patio
Start With Your Own Property
The wizard asks the questions for this property type and routes it to the right lane.