Cost Segregation Case Studies for Hilton Head Investors: $400K vs $750K vs $1.2M

About Donna Gilmore

Donna Gilmore is the Director of Operations for COAST, the #1 eXp real estate team in South Carolina. With over a decade in construction operations and deep expertise in investment property analysis, she helps high-net-worth investors maximize returns through strategic tax planning and property selection. Schedule a Tax Strategy Consultation →

Related Articles

• → How to Qualify for STR Non-Passive Status in 2026
• → Why Hilton Head STR Owners Benefit from the STR Loophole
• → The Best Seasons to Buy or Sell on Hilton Head Island

# Cost Segregation Case Studies for Hilton Head Investors: $400K vs $750K vs $1.2M (2026 Comparison Guide)

Cost segregation can dramatically increase the tax efficiency of Hilton Head rental properties—but the financial impact varies significantly by price point. In this guide, I break down real-world case studies across three common segments:

• $400,000 villas and condos
• $750,000 mid-range short-term rentals
• $1,200,000 luxury STR homes (often with pools)

These examples show how depreciation, bonus depreciation, and year-one tax savings typically differ depending on property type, value, and STR income potential.

Why Hilton Head Investors Should Compare Price Points

Hilton Head’s STR market is unique because different neighborhoods and price tiers attract different guest profiles and offer different tax advantages. For example:

• $400K properties often provide strong occupancy
• $750K homes balance cash flow + appreciation
• $1.2M+ homes offer the largest depreciation allocations

Understanding how depreciation scales across price tiers helps investors:

• Forecast tax savings
• Optimize purchase strategy
• Plan renovations
• Evaluate ROI more accurately

2026 Cost Segregation Snapshot (Side-by-Side Overview)

These figures reflect realistic Hilton Head property classifications and typical land allocations.

Case Study #1 — $400,000 Villa or Condo

Property Overview

• Price: $400,000
• Depreciable basis: $320,000 (after land)
• Typical STR income: ~$75,000/year

Cost Segregation Breakdown

• 5-year property: ~$40,000
• 15-year property: ~$20,000
• Total accelerated: ~$60,000

Year-One Depreciation

• Total depreciation: ~$69,455
• Tax savings (30%): ~$17,346

Best for: First-time STR owners, villa buyers, and investors looking for accessible entry points.

Case Study #2 — $750,000 Short-Term Rental

Property Overview

• Price: $750,000
• Depreciable basis: $600,000 (after land)
• Typical STR income: $135,000–$165,000/year

Cost Seg Breakdown

• 5-year assets: ~$80,000
• 15-year assets: ~$35,000
• Total accelerated: ~$115,000

Year-One Depreciation

• Total depreciation: ~$135,000
• Tax savings (30%): ~$40,500

Best for: Investors balancing STR income + personal use + strong appreciation.

Case Study #3 — $1,200,000 Luxury Home with Pool

Property Overview

• Price: $1,200,000
• Depreciable basis: $960,000 (after land)
• Typical STR income: $220,000–$280,000+/year

Cost Seg Breakdown

• 5-year assets: ~$150,000
• 15-year assets: ~$75,000
• Total accelerated: ~$225,000

Year-One Depreciation

• Total depreciation: ~$225,000
• Tax savings (30%): ~$67,500

Best for: High-income earners, luxury STR investors, and those seeking maximum tax leverage.

Which Hilton Head Price Tier Is Best?

The “best” price tier depends on your goals:

• $400K range: Lower risk, strong occupancy, accessible entry point
• $750K range: Balanced cash flow, appreciation, and STR performance
• $1.2M+ range: Maximum tax benefit + highest STR income potential

I help investors match their financial goals with the right neighborhoods and price tiers across Hilton Head and Bluffton.

Frequently Asked Questions

Does a more expensive property always produce more tax savings?

Larger homes often have more depreciable components, but the best ROI depends on STR income, land allocation, and property type.

Does Bluffton offer strong cost segregation opportunities?

Yes—especially for long-term or mid-term rentals in planned communities with newer construction.

Do I need to be a real estate professional to benefit?

No. STR non-passive status can unlock the same tax advantages without qualifying for REPS.

Is cost segregation worth it on a $400K property?

Yes. Even smaller properties can generate $10K+ in net first-year savings.

Want a Custom Cost Segregation Projection?

I help investors analyze Hilton Head STRs across all price tiers, including:

• Projected STR income
• Cost segregation estimates
• Renovation-driven depreciation
• Long-term appreciation modeling

Want a personalized breakdown? Contact me and I’ll run the numbers for your target property.

Disclaimer

This article is for educational purposes only and does not constitute financial, tax, or legal advice. Please consult a qualified professional regarding tax strategy.

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.