Haverhill’s rental stock is old, compact, and close to the state line: two- and three-family homes, brick shoe factories reworked into apartments, and a city limit that runs along the New Hampshire border. Cost segregation in Haverhill follows the federal rules used everywhere else, yet the age of these buildings and the Massachusetts return decide how much a study is worth to you.
As co-founder of Seneca Cost Segregation and a real estate investor myself, I’ve worked with owners of small Midwest single-family homes, self-storage facilities, and multi-million-dollar manufacturing plants. What we find on older multifamily buildings is that the owner’s records of past roof, heating, and kitchen work carry real weight in a study, since they show our engineers what was replaced and when.
I wrote this for Haverhill owners trying to decide whether a study fits their building. Below, I cover the building types common in the city, how repairs and replacements on old stock are handled, what Massachusetts does with reclassified assets, and a worked example for a two-family owned by someone living in New Hampshire.
TL;DR: Cost Segregation for Haverhill Rental Owners
- ●A hypothetical $600,000 Haverhill two-family gains about $27,971 in first-year federal tax savings from a study: the Massachusetts gain starts smaller, at $545, and keeps arriving in later years.
- ●Short-life components bought after January 19, 2025 can be written off in year one: 100% bonus depreciation applies on your federal return once the property is acquired and placed in service after that date.
- ●Old buildings come with a second benefit: when you replace a roof or boiler, a partial disposition election can turn the old component’s remaining basis into a loss, if you make it on time.
- ●Living in New Hampshire does not take you out of Massachusetts tax: rent from a Haverhill property is Massachusetts-source income, so the state’s separate depreciation schedule still applies to you.
- ●Converted shoe-factory apartments usually follow residential rules: when 80% or more of the rent comes from dwelling units, interior work does not qualify for the 15-year improvement class reserved for nonresidential buildings.
- ●Your assessment can set the land split: Haverhill’s assessed land and building values give your CPA an IRS-accepted way to divide the purchase price when market values are unclear.
What a Study Changes on a Haverhill Rental
The point of the study is to break one slow depreciation schedule into a handful of faster ones.
Without a study, the building portion of a rental is deducted in equal slices over 27.5 years, or over 39 years for a commercial building. An engineering-based study sorts the purchase or construction cost into the faster classes the tax code assigns:
- ●5-year property, which in a residential rental includes appliances, carpets, and furniture
- ●7-year property in commercial space, including office furniture and fixtures
- ●15-year land improvements, from sidewalks and fencing to landscaping and shrubbery
Under the One Big Beautiful Bill, property in those shorter classes that is acquired and placed in service after January 19, 2025 qualifies for 100% bonus depreciation on your federal return. The acquisition date follows the binding written contract, so a Haverhill deal signed before that date needs a closer look from your CPA before anyone assumes a full first-year write-off.
Haverhill Building Types and How a Study Treats Them
Haverhill’s housing leans toward small multifamily and older construction, and each type raises its own questions in a study.
Two-Family and Three- or Four-Unit Homes
Small multifamily makes up a large share of the city. Haverhill’s 2026-2031 Housing Production Plan, drawing on 2023 Census survey data, puts 11% of the city’s housing units in two-unit buildings and another 11% in buildings with three or four units.
Each rented unit brings its own kitchen, appliances, flooring, and fixtures, so a two-unit rental property can hold more short-life property than a single-family house at the same price. If you live in one of the units, IRS Publication 527 treats your unit and the rented unit as two separate properties, and only the rented part is depreciated.
Converted Shoe Factories Near Washington Street
The Washington Street Shoe District, listed on the National Register of Historic Places in 1976, holds the brick factories that once made Haverhill a shoe town. Amtrak’s station history notes that historic factories near the Haverhill stop now house apartments, shops, galleries, and restaurants.
A converted factory counts as residential rental property when at least 80% of its gross rental income comes from dwelling units, and that label decides more than the 27.5-year life. Under IRS Publication 946, qualified improvement property covers interior improvements to nonresidential buildings only, so interior work in an apartment conversion stays on the building schedule unless a study shows it is personal property or site work.
When street-level retail brings in enough of the rent to push the building below the 80% line, the whole structure moves to 39 years, which our page on mixed-use property studies walks through. Owners pairing a conversion with historic rehabilitation credits should plan the study alongside the credit work, because federal law excludes from the credit any spending not depreciated straight line.
Newer Downtown Apartment Buildings
The city’s housing plan notes that recent downtown developments have added new multifamily units. For a building you construct, the contractor’s pay applications and cost breakdowns let our engineers price components directly instead of working back from a purchase price.
Depreciation on a new building begins when it is ready and available for its intended use, so keep the records that show when units were ready for tenants. Our page on cost segregation for new construction lists the project documents that help most.
Commercial and Industrial Property
Offices, medical suites, retail space, and industrial buildings sit on the 39-year schedule, which leaves a wide gap between the building life and the component lives. Interior improvements you make after a commercial building is first placed in service can qualify as qualified improvement property, a 15-year class eligible for bonus depreciation, as long as the work does not enlarge the building or involve elevators, escalators, or the internal structural framework.
We see this consistently on manufacturing and medical space: electrical and plumbing runs that serve specific equipment, instead of the building as a whole, are where we most often find short-life property in those buildings.
Plan Repairs and Replacements on Older Haverhill Buildings
Age is the defining feature of the city’s housing. The same housing plan reports that 40% of Haverhill’s units were built in 1939 or earlier and 48% before 1960, which means many owners are buying buildings with a long record of roof, heating, and kitchen work behind them.
How you treat the next round of work affects your deductions as much as the study does.
Repair or Improvement Under the Tangible Property Rules
Some spending on an old building can be deducted in the year you pay it. The IRS tangible property regulations give owners three elective shortcuts:
- ●De minimis safe harbor: if you have no applicable financial statement, items costing $2,500 or less per invoice or item can be deducted.
- ●Routine maintenance safe harbor: recurring work on a building’s structure or systems that you expect to perform more than once in the 10 years after you place them in service can be deducted, though betterments are excluded.
- ●Small taxpayer safe harbor: with average annual gross receipts of $10 million or less and a building with an unadjusted basis of $1 million or less, you can deduct the year’s repairs, maintenance, and improvements on that building when they total no more than 2% of its unadjusted basis or $10,000, whichever is less.
Work outside these rules is judged on its facts, and spending that betters, restores, or adapts the building is capitalized. A component-level schedule from a study makes that call easier, since your CPA can see what each system cost and where it sits on the books.
Write Off the Old Roof or Boiler You Replace
When you replace a major component, the old one stays on your depreciation schedule unless you take it off. Treasury Regulation 1.168(i)-8 lets you make a partial disposition election, retire the replaced portion, stop depreciating it, and recognize a loss on whatever basis it had left.
Outside a few narrow exceptions tied to IRS examinations, the election is due by the due date, including extensions, of the original return for the year the old component comes out. Where your records make it impracticable to determine what that component cost, the regulation accepts any reasonable method and expressly lists a study allocating the asset’s cost to its individual components.
Ordering the study before the work starts is often the cleaner path, and our guide to timing a study around a renovation covers both sequences.
How Massachusetts Treats Your Depreciation
Your federal return and your Massachusetts return start from the same study and part ways in the first year.
According to the Department of Revenue’s TIR 03-25, Massachusetts adopts none of IRC 168(k) for the personal income tax or the corporate excise. You compute state depreciation as though you had declined bonus depreciation, adjust each asset’s Massachusetts basis every year, and figure your Massachusetts gain at sale with the state depreciation, so the state gain will not match the federal one.
The reclassification still pays off on the state side, just more slowly, since the short-life components run on their 5, 7, and 15-year schedules instead of 27.5 or 39 years. Massachusetts taxes most income at 5%, plus a 4% surtax on 2026 income above $1,107,750, so each dollar of extra state depreciation saves 5 to 9 cents.
Owners Who Live in New Hampshire
Haverhill sits on the New Hampshire line, and owners who live across it still have a Massachusetts filing to plan for. The Massachusetts Department of Revenue counts rent from real property located in Massachusetts as Massachusetts-source income for nonresidents, so a New Hampshire resident with a Haverhill rental files a Massachusetts nonresident return and carries the decoupled schedule on it.
New Hampshire’s Department of Revenue Administration states that the state does not tax W-2 wages, and its Interest and Dividends Tax was repealed for taxable periods beginning after December 31, 2024. For many individual owners, that leaves the Massachusetts nonresident return as the one state return where the depreciation shows up.
Depending on how you own the property, New Hampshire’s business taxes may come into play, so ask your CPA how your structure is treated. If you also own property on the New Hampshire side, our New Hampshire cost segregation guide covers those buildings.
Haverhill Property Taxes and the Land Split
Haverhill uses a split property tax rate, and your assessment can also help with the most basic number in any study.
For fiscal year 2026, the city’s Board of Assessors lists a residential rate of $10.61 per $1,000 of assessed value and a commercial rate of $19.17. A cost segregation study does not change either rate or the class your property is assessed in, because its categories exist for federal and state income tax.
Land is never depreciated, so the split between land and building sets the ceiling on everything a study can reclassify. Publication 527 lets you divide the purchase price using the assessor’s land and building values when you are not certain of fair market values, and our article on how to determine land value compares that method with appraisals.
Estimate the Savings on a Haverhill Two-Family
Here is one hypothetical two-family worked through both returns.
- ●Purchase price of $600,000, both units rented, placed in service in March 2026 under a contract signed that year
- ●The owner lives in New Hampshire and files a Massachusetts nonresident return
- ●25% of the price allocated to land, leaving a $450,000 building basis
- ●20% of the building basis reclassified: $60,000 of 5-year property and $30,000 of 15-year land improvements
- ●A 32% federal rate and the 5% Massachusetts rate, with the owner able to use the deduction
The federal column expenses the full $90,000 through bonus depreciation and applies the March first-year rate of 2.879% to the remaining $360,000. The Massachusetts column uses first-year MACRS rates of 20% on the 5-year property and 5% on the 15-year property, so the state benefit continues in the following years. Rental losses are generally passive, and the $25,000 allowance for actively managed rentals phases out between $100,000 and $150,000 of modified adjusted gross income.
The Cost Segregation Study Process at Seneca
At Seneca, here is what the cost segregation study process looks like for Haverhill properties.
Step 1: Property Details and a Free Estimate
You share the price, closing date, unit count, and any renovation history, and our engineering team builds a preliminary savings estimate from that information. The estimate and the proposal are free, and you only pay if you decide to move forward.
Step 2: Onsite or Virtual Walkthrough
You pick the format. Many commercial owners choose an onsite inspection, while a virtual walkthrough works well for most residential rentals, including two-families where a tenant or property manager can show each unit.
Step 3: Component Breakdown and Engineering Review
Our engineers catalog everything that makes up the property, from the shell and the systems to finishes and site work, and assign each item a cost and recovery period. You receive a full component breakdown, and our Head of Engineering signs off on every study before it is released.
Step 4: Report, Schedules, and CPA Handoff
We deliver studies in 5 to 10 business days once we have the documents and access we need from you. Your CPA gets the component costs and recovery periods for the federal return and everything needed to build the separate Massachusetts schedule.
When to Order a Study on a Haverhill Property
The best moment depends on where the building is in its life.
- ●In the year you buy: a study finished before your first return lets your CPA claim each component from the day the property was placed in service.
- ●Before a gut renovation: a study done first records what the old roof, heating plant, or kitchens cost, which supports a partial disposition election when they come out.
- ●After a conversion or fit-out is finished: new improvements carry their own placed-in-service dates, and a study assigns each one its correct recovery period.
Frequently Asked Questions
Below are the questions we hear most often from Haverhill owners weighing a study.
Why Haverhill Owners Work With Seneca
Seneca does cost segregation and nothing else, and our team handles every study in-house, so you talk directly with the people doing the engineering instead of a sales rep passing messages along. Our engineers have assessed 10,200+ properties with zero IRS audits triggered or lost, and audit defense comes with every report.
Every client is assigned a dedicated Project Manager, our Engineering team, and an Advisor, with real-time updates as the study moves through each stage and a Head of Engineering review before the report reaches your CPA. We break down every component of the property and also run Qualified Production Property (QPP) studies.
Our studies range from single-family rentals and self-storage to 120+ unit hotels and office buildings over 40,000 square feet. For a quick first number on your Haverhill building, try the Seneca savings calculator.
Conclusion
A Haverhill study works best when it is matched to the building in front of you. A rented two-family, a converted factory, and a commercial building each land in a different place on the federal return, and Massachusetts spreads the same components across their full lives.
The city’s older stock adds a second layer of value, since good component records support repair decisions and partial disposition elections for years after the purchase. Owners living in New Hampshire get the same Massachusetts treatment as everyone else on the rental income.
If you want a starting number, run the calculator or ask for a free preliminary estimate, and our engineers will show you what a study is likely to find before you commit.
