The 2026 Cost Segregation Calculator for Hilton Head Real Estate Investors

Cost segregation is one of the most powerful tax strategies available to Hilton Head and Bluffton real estate investors. By accelerating depreciation on certain components of a property, investors can create large first-year deductions and significantly reduce taxable income.

This article gives you a simple calculator-style framework to estimate:

• Your depreciable basis
• Accelerated (bonus-eligible) assets
• First-year bonus depreciation
• Total first-year depreciation
• Estimated tax savings

Whether you’re analyzing a $400,000 villa or a $1.3M luxury STR, these steps help you quickly see the potential impact of cost segregation in 2026.

Step 1: Calculate Your Depreciable Basis

Not all of a property’s purchase price can be depreciated. The land portion is not depreciable, so the first step is to remove land value.

Formula:

Depreciable Basis = Purchase Price × (1 – Land Percentage)

In many Hilton Head transactions, land is often estimated between 15–25% of the purchase price.

Example:

• Purchase price: $800,000
• Land %: 20% (0.20)

Depreciable Basis = $800,000 × (1 – 0.20) = $640,000

Step 2: Estimate Accelerated Property (5, 7, and 15-Year Assets)

A cost segregation study identifies components that can be depreciated over shorter timelines, typically:

• 5-year property: Appliances, carpets, cabinets, fixtures, some interior finishes
• 15-year property: Landscaping, patios, driveways, some site improvements

In many Hilton Head resort-style properties, these accelerated components often total between 15%–30% of the depreciable basis.

Example:

• Depreciable basis: $640,000
• Accelerated % (5- and 15-year): 25% (0.25)

Accelerated Assets = $640,000 × 0.25 = $160,000

Step 3: Apply the 2026 Bonus Depreciation Percentage

Bonus depreciation allows a large portion of accelerated assets to be written off in year one. The exact percentage can change with legislation, but many 2026 scenarios model 60%–80% bonus depreciation on qualified assets.

To be conservative, you might assume 60% bonus depreciation when estimating.

Formula:

Bonus Depreciation = Accelerated Assets × Bonus Depreciation %

Example:

• Accelerated assets: $160,000
• Bonus %: 60% (0.60)

Bonus Depreciation = $160,000 × 0.60 = $96,000

Step 4: Calculate Standard Depreciation

The remaining building basis is still depreciated over 27.5 years (for residential property).

Formula:

Standard Depreciation = Depreciable Basis ÷ 27.5

Example:

• Depreciable basis: $640,000

Standard Depreciation = $640,000 ÷ 27.5 ≈ $23,273

Step 5: Determine Total First-Year Depreciation

This is where cost segregation becomes very compelling.

Formula:

Total First-Year Depreciation = Bonus Depreciation + Standard Depreciation

Example:

• Bonus depreciation: $96,000
• Standard depreciation: $23,273

Total First-Year Depreciation = $96,000 + $23,273 = $119,273

Step 6: Estimate Your Tax Savings

Finally, multiply your total first-year depreciation by your effective tax rate.

Formula:

Estimated Tax Savings = Total Depreciation × Tax Rate

Most high-income STR investors fall in the 28%–35% effective range. For modeling, 30% is a common assumption.

Example:

• Total depreciation: $119,273
• Tax rate: 30% (0.30)

Tax Savings = $119,273 × 0.30 ≈ $35,782

So in this example, an $800,000 Hilton Head property could potentially generate around $36,000 in first-year tax savings—depending on your exact tax profile.

Quick Reference Table: Cost Segregation Scenarios

These numbers are estimates, but they highlight how powerful cost segregation can be for Hilton Head investors at different price points.

Who Benefits Most from Cost Segregation in Hilton Head?

• Short-term rental (STR) owners who qualify for STR non-passive status
• High-income W-2 earners (medical, tech, finance, executives)
• Real estate professionals who qualify for REPS
• Investors planning renovations (pools, decks, kitchens, outdoor spaces)
• Buyers of properties above $300,000, where the ROI tends to be strongest

Using an Interactive Calculator

The formulas in this article are designed so you can plug in your own numbers—or use an online calculator to run quick estimates for different scenarios.

If you’d like a simple, ready-to-use calculator with all of these formulas built in, you can also use the interactive Cost Segregation Calculator on my site. Just enter:

• Purchase price
• Land percentage
• Estimated accelerated percentage
• Bonus depreciation percentage
• Your estimated tax rate

The calculator will automatically estimate your:

• Depreciable basis
• Accelerated assets
• Bonus depreciation
• Standard depreciation
• Total first-year depreciation
• Estimated tax savings

Final Thoughts

Cost segregation can be a game-changer for Hilton Head and Bluffton investors, especially in 2026 as more buyers look for ways to combine strong rental performance with intelligent tax planning.

Even a rough estimate using a simple calculator can show you whether cost segregation is likely to be worthwhile—and for many properties in this market, the answer is a clear yes.

If you’d like help running a cost segregation estimate on a specific property, or want to see how this pairs with STR tax strategies like non-passive status, I can walk you through the numbers step by step.

Disclaimer

This article and the calculator concepts are for educational purposes only and do not constitute tax, financial, or legal advice. Please consult a qualified CPA, tax advisor, or attorney regarding your specific situation and the current tax laws.

About the Author

By: Donna Gilmore – Realtor & Director of Operations for the #1 eXp Team in South Carolina

Expert Real Estate Mentor & Team Transition Specialist | AI Systems Strategist for Top-Producing Agents & Teams | Creator of the Systems-to-Scale AI Implementation Method™

Helping agents, teams, and leaders implement AI, automation, and high-performance systems to grow smarter, scale faster, and dominate their markets.