Cost Segregation in Orlando, FL

The world's #1 tourist destination meets a booming tech and aerospace economy — Orlando delivers STR goldmine potential near the theme parks, while a growing professional class drives strong long-term rental demand.

Population
2.7M
Median Home
$385K
Rent (3BR)
$2,100
Property Tax
0.92%
Annual Job Growth
50K+
Ranking
Tourism Capital
Overview

Value Props for Investors

TOURISM ENGINE
80M+ Annual Visitors — STR Goldmine

Walt Disney World, Universal Studios, and SeaWorld attract 80M+ visitors annually. Purpose-built vacation homes near the parks can gross $40-60K/year as STRs. Florida's SB 280 protects your right to operate, making this one of the safest STR markets in the country.

AEROSPACE HUB
Lockheed Martin + Space Coast = Tech Growth

Lockheed Martin's 10K-employee campus, L3Harris Technologies, and the nearby Space Coast (SpaceX, Blue Origin) are diversifying Orlando beyond tourism. UCF's 70K+ students (largest in the U.S.) fuel the tech talent pipeline.

DUAL INCOME PLAY
STR Revenue + Cost Seg = Maximum Year 1 Returns

A $385K vacation home near Disney can gross $45K+ as an STR while delivering $32.5K in Year 1 federal cost seg savings. That is $77.5K in combined Year 1 value on a $385K property — a 20% effective return before appreciation.

Tax Strategy

Cost Segregation & Tax Rules in Orlando, FL

Understanding how federal and Florida state tax rules interact is critical to maximizing your cost segregation benefits in Orlando.

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Typical Purchase
$385,000
Building Value
76%
24% land / 76% building
Cost Seg Range
25-40%
of building reclassified
Home Age
24 yrs
Built ~2000
What Gets Reclassified

A cost segregation study identifies building components that can be depreciated over 5, 7, or 15 years instead of the standard 27.5 or 39 years. In Orlando, typical reclassification rates are 25-40% of building value.

Purchase Price Breakdown
Building 76%$292,600
Land 24%$92,400
Building Value Reallocation (with Cost Seg)
5-Year Property18%
$52,668
15-Year Property12%
$35,112
27.5 / 39-Year (Remaining)70%
$204,820

5 & 15-year components ($87,780 = 30% of building) are eligible for bonus depreciation in Year 1.

Overline Study Cost & ROI
Overline Study Cost
$499 - $2,000
Avg. ROI
10-40x

The math: A $385,000 property with 76% building value and 30% reclassification yields ~$32,479 in Year 1 federal tax savings at the 37% bracket — significantly more ROI than traditional studies costing $5,000-$10,000+.

Housing Stock Advantage

With a median build year of 2000, Orlando's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

N/A — No State Income Tax
Florida Bonus Depreciation Conformity

Because Florida has no state income tax for individuals, there is no state-level depreciation deduction or conformity issue. Federal bonus depreciation under Section 168(k) applies in full. There is no state return to file for individual investors.

What This Means for Orlando Investors: Florida investors benefit from clean, simple cost segregation planning. Your entire tax benefit is federal — no state addback, no conformity complications, and no state depreciation recapture. Combined with low property taxes, Florida maximizes your after-tax returns.

Federal vs. FL Depreciation Timeline
PeriodFederal TreatmentFL State Treatment
Year 1100% bonus depreciationN/A — No state income tax
Years 2+Standard MACRS schedulesN/A — No state income tax
Section 179 Expensing
State ConformityLimited

Federal Section 179 limits apply — Florida has no state income tax. FL investors benefit from keeping 100% of their federal tax savings with no state clawback, making the Sunshine State one of the most tax-efficient environments for real estate investing.

Key Takeaway

A $380K property with a $285,000 depreciable basis and 30% cost seg reclassification yields ~$31,635 in federal tax savings in Year 1. Because Florida has no state income tax, your total Year 1 savings = $31,635 with zero state tax friction.

Bottom Line

Florida is one of the simplest states for cost segregation. No state income tax = no conformity issues. Your entire savings are federal, immediate, and unreduced. The only planning consideration is Florida's high insurance costs, which should be factored into your cash flow analysis.

Local Property Tax
0.92%
Orlando effective rate
Transfer Tax
$0.70 per $100 of sale price (documentary stamps)
State Income Tax
0%
None
Property Tax Details

Orange County effective rate of ~0.92%. Osceola County (Kissimmee) is ~0.95%. CDD (Community Development District) fees can add $1,500-3,000/year in newer communities.

Assessment Methodology
MethodJust (market) value with Save Our Homes 3% cap for homestead
Reassessment CycleAnnually
Assessment BodyCounty Property Appraiser
Appeal WindowWithin 25 days of TRIM notice (typically August-September)
Appeal Success Likelihood
Very High
LowModerateGoodVery High

Florida's Value Adjustment Board (VAB) process is investor-friendly — no attorney required, and roughly 40-50% of appeals result in reductions. Non-homestead investment properties lack the 3% SOH cap, making them more susceptible to aggressive valuations and better candidates for appeal.

Work with Overline — Our team helps Orlando investors identify over-assessed properties and file tax appeals. A successful appeal can save thousands annually and compounds your cost seg savings.

Illustrative Example

Cost Seg Example for Orlando, FL

This example assumes a purchase eligible for 100% bonus depreciation. All factors below are based on averages from our historical cost segregation studies for FL properties. To see your exact savings, run a property-specific cost seg analysis below.

Typical Orlando, FL Property Details
$
50%95%
5%35%
2%25%
Total Reclassified30% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$292,600
$385,000 x 76%
Normal Annual Depreciation$10,640
$292,600 ÷ 27.5 yr (residential)
5-Year Reclassified$52,668
15-Year Reclassified$35,112
Total Accelerated$87,780
30% of $292,600 building value
Federal Tax Savings (Year 1)$32,479
$87,780 x 37% bracket
Total Year 1 Tax Savings$32,479
8.3x normal annual deduction captured in Year 1

FL State Tax: Florida investors benefit from clean, simple cost segregation planning. Your entire tax benefit is federal — no state addback, no conformity complications, and no state depreciation recapture. Combined with low property taxes, Florida maximizes your after-tax returns.

Insurance & Risk

Insurance Landscape in Orlando

Insurance costs directly impact your cash flow. Understanding Orlando's risk profile helps you budget accurately and avoid coverage gaps.

Avg. Annual Premium
$3,600
Orlando average
State Average
$4,200
83% above average — highest in the nation
National Average
$2,300
for comparison
Key Risk Drivers
1
Hurricanes (Central FL gets tropical storm effects)
2
Severe thunderstorms and lightning (Orlando is the lightning capital of the U.S.)
3
Flooding from heavy summer rains
Coverage Recommendations
Shop aggressively — Citizens (state insurer of last resort) vs. private market. Get 3+ quotes.
Flood insurance is essential statewide (NFIP or private). Do not skip this.
Named storm / hurricane deductible (typically 2-5% of dwelling coverage) — understand this before purchasing
Wind mitigation inspection — can reduce premiums 10-40% with proper shutters, roof ties, etc.
Umbrella liability policy ($1M+) is critical for rental properties in a high-litigation state
Cost Seg + Insurance Connection

Florida's insurance crisis makes accurate building valuation more important than anywhere else. A cost seg study provides component-level documentation that supports precise replacement cost estimates — critical when carriers are scrutinizing every claim. This documentation can also help you avoid over-insurance, potentially saving thousands annually.

Revenue Comparison

STR vs. Long-Term Rental in Orlando

Compare short-term (Airbnb) and long-term rental income for a typical Orlando investment property.

Long-Term Rental
Monthly Rent (3BR)$2,100
Annual Gross$25,200
Vacancy Rate5%
Net Annual$23,940
Tenant StabilityHealthcare and aerospace professionals provide stable demand. UCF student housing adds seasonal demand.
Depreciation Schedule27.5 years
Residential rental property
Tax TreatmentPassive Only
Losses can only offset passive income unless you qualify as a Real Estate Professional (750+ hrs/yr)
Short-Term Rental
Avg. Nightly Rate$200
Occupancy Rate72%
Annual Gross Revenue$52,560
Net Annual (after expenses)$39,420
Management25-30% of gross (vacation rental managers)
Depreciation Schedule39 years
Classified as commercial / transient use property
Tax TreatmentActive Income Eligible
Losses can offset W-2 / active income if you document 100+ hrs of material participation and meet IRS criteria
Cost Seg + STR Loophole

Orlando's theme park STR market is purpose-built for cost seg optimization. Vacation homes with pools, game rooms, and themed decor have abundant reclassifiable components. Material participation + cost seg on a $385K property yields $32.5K in deductions against active income.

Market Fundamentals

Economy & Housing Demand in Orlando

Strong economic engines create stable rental demand. Here is what drives Orlando's economy and housing market.

Median Income
$68,000
Rent-to-Income
29%
Healthy ratio
Vacancy Rate
4.8%
Pop. Growth
+1.9% annually
Major Employers
1
Walt Disney World (75K+)
2
AdventHealth (35K+)
3
Universal Orlando (25K+)
4
Lockheed Martin (10K+)
5
Electronic Arts (3K+)
6
University of Central Florida (13K+)
Top Industries
Tourism & Hospitality
Healthcare
Aerospace & Defense
Technology
Education
Landlord & STR Rules
Landlord Friendliness
Friendly
Eviction Timeline
30-45 days
STR Regulation
Permitted — Strong STR market near theme parks

Orlando/Orange County allows STRs with DBPR registration. Osceola County (Kissimmee) is one of the nation's largest STR markets with purpose-built vacation home communities near Disney. SB 280 protects STR rights statewide.

Why Invest Here

Orlando is a dual-play market. Near the parks (Kissimmee, Davenport), vacation STRs can gross $40-60K annually from 80M+ annual tourists. Away from the parks, a growing tech and aerospace sector (Lockheed Martin, L3Harris, EA) drives strong LTR demand. Zero state income tax ensures your $32.5K in Year 1 cost seg savings are unreduced.

Where to Invest

Top Neighborhoods in Orlando

#1
Kissimmee / Davenport (Theme Park Corridor)
Vacation home communities purpose-built for STR near Disney and Universal
Price
$375K
Rent
$2,100
Yield
6.7%
The epicenter of Orlando's vacation rental market. Purpose-built communities (Champions Gate, Reunion, Storey Lake) offer pools, clubhouses, and proximity to Disney. STR gross revenue of $40-55K/year. Pools, game rooms, and upgrades yield strong cost seg results.
$375K$2,1006.7%
The epicenter of Orlando's vacation rental market. Purpose-built communities (Champions Gate, Reunion, Storey Lake) offer pools, clubhouses, and proximity to Disney. STR gross revenue of $40-55K/year. Pools, game rooms, and upgrades yield strong cost seg results.
The epicenter of Orlando's vacation rental market. Purpose-built communities (Champions Gate, Reunion, Storey Lake) offer pools, clubhouses, and proximity to Disney. STR gross revenue of $40-55K/year. Pools, game rooms, and upgrades yield strong cost seg results.
#2
Lake Nona
Master-planned community with Medical City, VA Hospital, and USTA campus
Price
$480K
Rent
$2,500
Yield
6.3%
Lake Nona Medical City houses VA Medical Center, Nemours Children's, and UCF medical school. Premium tenant pool of medical professionals. Newer construction (2010s+) with abundant cost seg components.
$480K$2,5006.3%
Lake Nona Medical City houses VA Medical Center, Nemours Children's, and UCF medical school. Premium tenant pool of medical professionals. Newer construction (2010s+) with abundant cost seg components.
Lake Nona Medical City houses VA Medical Center, Nemours Children's, and UCF medical school. Premium tenant pool of medical professionals. Newer construction (2010s+) with abundant cost seg components.
#3
Winter Park / Baldwin Park
Upscale, walkable neighborhoods with Rollins College and boutique dining
Price
$500K
Rent
$2,600
Yield
6.2%
Orlando's most prestigious rental submarket. High-income professionals and Rollins College faculty create premium, stable demand. Historic Winter Park homes can yield above-average cost seg rates.
$500K$2,6006.2%
Orlando's most prestigious rental submarket. High-income professionals and Rollins College faculty create premium, stable demand. Historic Winter Park homes can yield above-average cost seg rates.
Orlando's most prestigious rental submarket. High-income professionals and Rollins College faculty create premium, stable demand. Historic Winter Park homes can yield above-average cost seg rates.
#4
Clermont / Winter Garden
Fast-growing western suburbs with growing employment and family appeal
Price
$380K
Rent
$2,100
Yield
6.6%
Western corridor growth driven by Hamlin Town Center development and proximity to Disney employment. Strong school districts attract families. New construction with modern cost seg components.
$380K$2,1006.6%
Western corridor growth driven by Hamlin Town Center development and proximity to Disney employment. Strong school districts attract families. New construction with modern cost seg components.
Western corridor growth driven by Hamlin Town Center development and proximity to Disney employment. Strong school districts attract families. New construction with modern cost seg components.
Local Partners

Investor-Friendly Partners in Orlando, FL

We are building a curated directory of top investor-friendly brokers, property management companies, and service providers in Orlando, FL.

Investor-Friendly Brokers

Top real estate agents who specialize in investment properties and understand cost segregation, 1031 exchanges, and cash-flow analysis.

Coming Soon
Property Management

Vetted property managers who handle tenant screening, maintenance, and rent collection for both long-term and short-term rentals.

Coming Soon
Insurance Agents

Independent insurance agents who specialize in rental property coverage and can leverage cost seg data for accurate replacement cost estimates.

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Are you a broker, property manager, or insurance agent serving investors in Orlando, FL?

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Frequently Asked Questions

Cost Segregation FAQ — Orlando, FL

How much can I save with cost segregation in Orlando, FL?

−

On a typical $385K property in Orlando, cost segregation can yield approximately $32,479 in Year 1 combined federal and state tax savings at the 37% bracket, with a study ROI of 650%. Overline studies cost $499-$2,000.

What is the property tax rate in Orlando?

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The effective property tax rate in Orlando is approximately 0.92%. Orange County effective rate of ~0.92%. Osceola County (Kissimmee) is ~0.95%. CDD (Community Development District) fees can add $1,500-3,000/year in newer communities.

Is Orlando a good market for real estate investing?

+

Orlando is a dual-play market. Near the parks (Kissimmee, Davenport), vacation STRs can gross $40-60K annually from 80M+ annual tourists. Away from the parks, a growing tech and aerospace sector (Lockheed Martin, L3Harris, EA) drives strong LTR demand. Zero state income tax ensures your $32.5K in Year 1 cost seg savings are unreduced.

What is the average insurance cost for rental properties in Orlando?

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The average annual homeowner insurance premium in Orlando is approximately $3,600. Orlando's inland location provides some hurricane protection but the metro still experiences tropical storm effects. Lightning and summer thunderstorms are frequent May-September. Budget $3,600-5,000/year including flood insurance.

What are the STR and landlord rules in Orlando?

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Orlando is rated "Friendly" for landlords. STR regulation: Permitted — Strong STR market near theme parks. Eviction timeline: 30-45 days. Orlando/Orange County allows STRs with DBPR registration. Osceola County (Kissimmee) is one of the nation's largest STR markets with purpose-built vacation home communities near Disney. SB 280 protects STR rights statewide.

Who are the major employers in Orlando?

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Major employers in Orlando include Walt Disney World (75K+), AdventHealth (35K+), Universal Orlando (25K+), Lockheed Martin (10K+), Electronic Arts (3K+). Top industries: Tourism & Hospitality, Healthcare, Aerospace & Defense, Technology, Education.

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