I once reviewed a cost segregation study for a client who’d just completed a major renovation on a 36-hole course. The investment was substantial: millions spent on drainage upgrades, clubhouse expansion, new lighting systems, and rebuilt bunkers. When they initially submitted the property for depreciation, the entire value had been lumped into a 39-year straight-line schedule, leaving more than six figures of tax savings on the table.
We conducted a detailed engineering-based study and were able to reclassify nearly 28% of the property’s basis into 5, 7, and 15-year categories. With the reinstatement of 100% bonus depreciation, they wrote off over $1.2 million in the first year alone, significantly improving cash flow.
For investors who’ve recently acquired, built, or improved their golf course, cost segregation isn’t just a strategy; it’s a massive financial advantage. With the return of 100% bonus depreciation under the 2025 tax law, the timing for golf course owners to act has never been better.
Why Golf Courses Require a Specialized Depreciation Strategy
Golf courses differ from other commercial properties in that they blend non-building land improvements, utility infrastructure, and real estate amenities into a single operating entity. Fairways, cart paths, irrigation systems, and driving ranges aren’t just landscaping; they’re income-generating assets with useful lives far shorter than 39 years.
Yet too often, these elements are treated as part of the property’s overall structure in standard tax filings, resulting in unnecessarily slow depreciation. That’s where cost segregation creates leverage. By isolating and properly categorizing short-lived components, owners can legally accelerate depreciation and substantially improve early-year cash flow.
How Cost Segregation Works for Golf Course Assets
Cost segregation breaks a property’s basis into asset classes with shorter tax lives (typically 5-, 7-, or 15-year categories), rather than defaulting to a single 39-year depreciation schedule. For golf courses, this often includes:
- 15-Year property: Site grading, cart paths, drainage systems, fencing, and landscaping
- 7-Year property: Fixtures, signage, outdoor furniture
- 5-Year property: Equipment, security systems, lighting, and specialty mechanicals
This reclassification lets golf course owners write off certain parts of their property much faster than the standard 39-year timeline. That means bigger tax deductions in the early years, stronger cash flow, and more money available to reinvest back into the course.
If the reclassified assets qualify for 100% bonus depreciation (which they often do), you can write off their entire value in the year they’re placed in service. But even without bonus depreciation, breaking out these shorter-life assets still creates major tax savings over time.
High-Value Golf Course Components That Often Qualify
Most cost segregation wins for golf courses come from reclassifying infrastructure and operational assets that are otherwise treated as long-life improvements. Common examples include:
- Irrigation and drainage systems: Typically 15-year property, eligible for bonus depreciation
- Cart paths and bridges: Site improvements that can be segregated from the land
- Clubhouse interior build-outs: Elements like millwork, flooring, and specialty lighting often fall under QIP
- Pro shop and restaurant equipment: FF&E, including POS systems and custom displays
- Groundskeeping equipment: If acquired with the property, it qualifies as 5-year personal property
Identifying and quantifying these elements accurately requires a specialized, engineering-based analysis, not a generic tax allocation. Without that level of detail, owners risk underreporting eligible assets, overpaying taxes, or triggering compliance issues down the line.
A proper study doesn’t just reclassify costs. It documents them in a way that stands up to IRS scrutiny and delivers real, defensible savings.
Assessing the Numbers: A Hypothetical Golf Course Case Study
Let’s say you’re a private owner who recently purchased an established golf course for $8 million. Of that, $6 million is allocated to improvements (everything outside of raw land value). You bring in a cost segregation specialist to analyze the property in detail.
After a full engineering-based study, roughly $2.1 million of the total basis is reclassified into shorter-lived asset categories, things like irrigation systems, cart paths, clubhouse interiors, outdoor lighting, and equipment.
Under the updated 2025 tax rules, if the course was purchased and placed in service after 19 January 2025, those reclassified assets qualify for 100% bonus depreciation. That means instead of spreading that $2.1 million deduction over 15, 27.5, or 39 years, you can write off the full amount immediately in the first year.
If you’re in the 35% combined federal and state tax bracket, that creates a $735,000 reduction in your tax liability for the year. That’s capital you can now use to pay down debt, fund capital improvements, or even offset income from other operations.
Getting Started: What Golf Course Owners Should Know
If you’ve recently purchased, built, or renovated a course, now is the right time to evaluate a cost segregation study. Especially given the updated bonus depreciation rules. Here’s what you’ll need:
- Specialized firm: Work with a provider that understands the nuances of recreational and hospitality properties. Generic tax consultants often miss high-value reclassifications that apply to golf assets.
- Documentation: Gather site plans, blueprints, contractor invoices, asset ledgers, and cost breakdowns. The more detail you can provide, the more accurate (and defensible) the study will be.
- Eligibility review: Consider a quick feasibility analysis before committing to a full study. This can estimate your likely tax benefit and help determine if the investment is worth it.
- Lookback potential: If your course was acquired or improved in a prior year, you may still benefit. A “lookback” study using IRS Form 3115 allows you to retroactively apply cost segregation without amending past returns.
- Exit strategy alignment: If you plan to refinance or sell in the next few years, accelerated depreciation may affect your tax outcome at exit. Factor this into your broader financial strategy.
Even properties acquired in previous years may benefit through a “lookback” study using Form 3115 to adjust depreciation without amending returns.
Bringing Tax Strategy to the Forefront of Course Management
Golf courses are complex, capital-intensive assets, and their tax treatment should reflect that. By identifying the right components and applying cost segregation properly, owners can unlock meaningful cash flow, improve asset performance, and position themselves for stronger long-term returns.
If you’ve recently acquired, renovated, or expanded a course, this is the time to revisit your depreciation strategy. The return of 100% bonus depreciation makes the upside even greater, but even beyond that, the value of reclassification holds steady.
To explore how cost segregation for golf course properties can improve your tax outlook, get in touch with the team at R.E. Cost Seg. We can help you evaluate the opportunity, run the numbers, and structure your study to deliver lasting value.
Ready to begin your tax savings journey?
