Cost Segregation in Raleigh-Durham, NC

Home to Research Triangle Park, three elite universities, and the nation's highest-quality tenant pool — Raleigh-Durham delivers premium rents, exceptional tenant stability, and strong cost segregation returns.

Population
2.1M
Median Home
$420K
Rent (3BR)
$2,100
Property Tax
0.72%
Annual Job Growth
45K+
Ranking
#5 Tech Hub
Overview

Value Props for Investors

TECH TRIANGLE
300+ Companies in Research Triangle Park

IBM, Cisco, Red Hat, and Epic Games anchor a 60K+ employee tech corridor. Apple's $1B campus in RTP is under construction, adding thousands more high-income jobs. Tech workers earning $100K-$180K create the highest-quality rental tenant pool in the Southeast.

EDUCATION MOAT
Three Elite Universities Drive Demand

Duke, UNC-Chapel Hill, and NC State collectively enroll 80K+ students and employ 60K+ faculty and staff. This creates a perpetual demand engine — students need housing, faculty need rentals while relocating, and graduates stay in the area for tech and healthcare jobs.

PREMIUM TENANTS
55% College-Educated Population

Raleigh-Durham has the highest percentage of advanced-degree holders of any major metro in the Southeast. High-income, highly-educated tenants translate to lower delinquency rates, better property maintenance, and 24-month average lease terms — the gold standard for landlords.

Tax Strategy

Cost Segregation & Tax Rules in Raleigh-Durham, NC

Understanding how federal and North Carolina state tax rules interact is critical to maximizing your cost segregation benefits in Raleigh-Durham.

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Typical Purchase
$420,000
Building Value
78%
22% land / 78% building
Cost Seg Range
25-38%
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 Raleigh-Durham, typical reclassification rates are 25-38% of building value.

Purchase Price Breakdown
Building 78%$327,600
Land 22%$92,400
Building Value Reallocation (with Cost Seg)
5-Year Property18%
$58,968
15-Year Property12%
$39,312
27.5 / 39-Year (Remaining)70%
$229,320

5 & 15-year components ($98,280 = 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 $420,000 property with 78% building value and 30% reclassification yields ~$36,364 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, Raleigh-Durham's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

Partial — Addback Required
North Carolina Bonus Depreciation Conformity

North Carolina requires taxpayers to add back 85% of federal bonus depreciation in the year it is claimed. The addback amount is then deducted ratably over the following 5 tax years (17% per year).

What This Means for Raleigh-Durham Investors: Federal cost segregation benefits apply in full. The state-level tax benefit is deferred but not lost — you receive the full NC deduction over 5 years instead of Year 1.

Federal vs. NC Depreciation Timeline
PeriodFederal TreatmentNC State Treatment
Year 1100% bonus depreciation15% of bonus + Section 179
Years 2-6Standard MACRS schedules17% of addback deducted each year
Section 179 Expensing
State ConformityConforms

Section 179 can be used alongside cost segregation for qualifying personal property components.

Key Takeaway

A $350K property with a $280K depreciable basis and 30% cost seg reclassification yields ~$31K in federal tax savings in Year 1. NC state savings of ~$3,800 are spread over 5 years (~$760/year).

Bottom Line

Federal savings are immediate and substantial. NC state savings are spread over 5 years due to the 85% addback rule. Plan your cash flow accordingly.

Local Property Tax
0.72%
Raleigh-Durham effective rate
Transfer Tax
$1 per $500 of sale price
State Income Tax
4.50%
Flat
Property Tax Details

Wake County (Raleigh) rate is ~$0.5135 per $100. Durham County rate is ~$0.5560 per $100. Among the lowest in NC's major metros.

Assessment Methodology
MethodMarket value with county-set ratios
Reassessment CycleEvery 4-8 years (county-dependent)
Assessment BodyCounty Tax Assessor
Appeal WindowWithin 30 days of revaluation notice
Appeal Success Likelihood
Good
LowModerateGoodVery High

North Carolina's infrequent revaluation cycle (4-8 years) means assessments can significantly lag or overshoot market values after revaluation. Wake County (Raleigh) and Mecklenburg County (Charlotte) have recently completed revaluations with aggressive increases. The informal review process is the fastest path to reduction.

Work with Overline — Our team helps Raleigh-Durham 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 Raleigh-Durham, NC

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

Typical Raleigh-Durham, NC Property Details
$
50%95%
5%35%
2%25%
Total Reclassified30% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$327,600
$420,000 x 78%
Normal Annual Depreciation$11,913
$327,600 ÷ 27.5 yr (residential)
5-Year Reclassified$58,968
15-Year Reclassified$39,312
Total Accelerated$98,280
30% of $327,600 building value
Federal Tax Savings (Year 1)$36,364
$98,280 x 37% bracket
NC State Tax Savings (Year 1)$663
Total Year 1 Tax Savings$37,027
8.3x normal annual deduction captured in Year 1

NC State Tax: Federal cost segregation benefits apply in full. The state-level tax benefit is deferred but not lost — you receive the full NC deduction over 5 years instead of Year 1.

Insurance & Risk

Insurance Landscape in Raleigh-Durham

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

Avg. Annual Premium
$1,680
Raleigh-Durham average
State Average
$1,900
17% below average
National Average
$2,300
for comparison
Key Risk Drivers
1
Severe thunderstorms
2
Hail damage
3
Occasional flooding from tropical remnants
Coverage Recommendations
Wind/hail coverage with separate deductible (mandatory in 18 coastal counties)
Flood insurance (especially eastern NC and low-lying areas)
Replacement cost vs. actual cash value — always choose replacement cost
Umbrella liability policy ($1M+ for rental properties)
Cost Seg + Insurance Connection

A cost segregation study documents your building's component values in detail — this same documentation supports accurate replacement cost estimates for insurance purposes. Investors who complete a cost seg study are better positioned to negotiate insurance premiums and avoid being underinsured.

Revenue Comparison

STR vs. Long-Term Rental in Raleigh-Durham

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

Long-Term Rental
Monthly Rent (3BR)$2,100
Annual Gross$25,200
Vacancy Rate4%
Net Annual$24,192
Tenant StabilityTech professionals and university faculty average 24+ month leases with very low delinquency
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$165
Occupancy Rate72%
Annual Gross Revenue$43,362
Net Annual (after expenses)$32,522
ManagementSelf or 20-25% PM fee
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

Raleigh's STR-permit system lets investors operate legally and claim the short-term rental loophole. With material participation in a furnished STR and a cost seg study, a $420K property can yield $37K in Year 1 tax savings — offsetting nearly 4 full years of net rental income.

Market Fundamentals

Economy & Housing Demand in Raleigh-Durham

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

Median Income
$85,000
Rent-to-Income
24%
Healthy ratio
Vacancy Rate
3.8%
Pop. Growth
+1.8% annually
Major Employers
1
Duke University/Health (40K+)
2
NC State University (10K+)
3
IBM (10K+)
4
Cisco (5K+)
5
Red Hat/IBM (4K+)
6
Epic Games (3K+)
7
WakeMed Health (9K+)
Top Industries
Technology
Healthcare
Education
Life Sciences
Clean Energy
Institutional Capital Is Flowing Into the Triangle

Public company earnings call transcripts over the past several quarters have repeatedly referenced Raleigh and the Research Triangle in the context of expansion, hiring, and capital investment. Historically, sustained corporate capex and relocation activity in secondary metros has preceded multi-year housing demand growth, rent stability, and appreciation cycles.

Apple's $1B campus in Research Triangle Park — under constructionGoogle Cloud expanding its Durham engineering hubEpic Games HQ expansion in Cary — 300+ new rolesFidelity Investments adding 1,800+ positions in Durham
Landlord & STR Rules
Landlord Friendliness
Very Friendly
Eviction Timeline
30-45 days
STR Regulation
Varies by municipality

Raleigh allows STRs with a zoning permit in most residential areas. Durham has more restrictive zoning for whole-home STRs. Check specific municipality rules before investing.

Why Invest Here

Research Triangle Park hosts 300+ companies with 60K+ employees. The 55% college-educated population creates America's highest-quality tenant pool — professionals earning $80K-$160K who pay rent on time and maintain properties. The STR-to-LTR hybrid strategy works exceptionally well here, with Year 1 tax savings of $30-35K through cost segregation.

Where to Invest

Top Neighborhoods in Raleigh-Durham

#1
North Hills
Raleigh's 'Midtown' — mixed-use hub with upscale retail, dining, and corporate offices
Price
$460K
Rent
$2,300
Yield
6.0%
North Hills is Raleigh's premier live-work-play submarket. Proximity to major employers (Citrix, First Citizens) and I-440 access make it highly desirable for working professionals. Premium rents and sub-3% vacancy create stable, predictable income streams. Newer 2000s-era construction offers strong cost seg components.
$460K$2,3006.0%
North Hills is Raleigh's premier live-work-play submarket. Proximity to major employers (Citrix, First Citizens) and I-440 access make it highly desirable for working professionals. Premium rents and sub-3% vacancy create stable, predictable income streams. Newer 2000s-era construction offers strong cost seg components.
North Hills is Raleigh's premier live-work-play submarket. Proximity to major employers (Citrix, First Citizens) and I-440 access make it highly desirable for working professionals. Premium rents and sub-3% vacancy create stable, predictable income streams. Newer 2000s-era construction offers strong cost seg components.
#2
Cary
Top-rated schools, safe neighborhoods, and strong family appeal — known as 'Containment Area for Relocated Yankees'
Price
$490K
Rent
$2,350
Yield
5.8%
Cary's school district consistently ranks among the best in NC, creating fierce demand from relocating tech families. SAS Institute (5K+ employees) and proximity to RTP make this a captive market for high-income tenants. Higher entry price is offset by premium rents and near-zero vacancy.
$490K$2,3505.8%
Cary's school district consistently ranks among the best in NC, creating fierce demand from relocating tech families. SAS Institute (5K+ employees) and proximity to RTP make this a captive market for high-income tenants. Higher entry price is offset by premium rents and near-zero vacancy.
Cary's school district consistently ranks among the best in NC, creating fierce demand from relocating tech families. SAS Institute (5K+ employees) and proximity to RTP make this a captive market for high-income tenants. Higher entry price is offset by premium rents and near-zero vacancy.
#3
Morrisville / RTP Corridor
Affordable suburb at the heart of Research Triangle Park, walkable to major tech campuses
Price
$395K
Rent
$2,050
Yield
6.2%
Morrisville is ground zero for RTP commuters. Lenovo, Cisco, and IBM campuses are minutes away. Entry prices 15% below Cary with comparable rents make this the best value play in the Triangle. Strong STR demand from corporate travelers visiting RTP.
$395K$2,0506.2%
Morrisville is ground zero for RTP commuters. Lenovo, Cisco, and IBM campuses are minutes away. Entry prices 15% below Cary with comparable rents make this the best value play in the Triangle. Strong STR demand from corporate travelers visiting RTP.
Morrisville is ground zero for RTP commuters. Lenovo, Cisco, and IBM campuses are minutes away. Entry prices 15% below Cary with comparable rents make this the best value play in the Triangle. Strong STR demand from corporate travelers visiting RTP.
#4
Durham — Southpoint / RTP South
Growing suburban corridor with major retail hub and proximity to Duke University
Price
$380K
Rent
$1,950
Yield
6.2%
Durham's Southpoint area benefits from Duke Health expansion and RTP employment without the premium of Chapel Hill or downtown Durham. The 1990s-2010s housing stock is ideal for cost seg, and rents have climbed 18% over the last 3 years as RTP employers expand.
$380K$1,9506.2%
Durham's Southpoint area benefits from Duke Health expansion and RTP employment without the premium of Chapel Hill or downtown Durham. The 1990s-2010s housing stock is ideal for cost seg, and rents have climbed 18% over the last 3 years as RTP employers expand.
Durham's Southpoint area benefits from Duke Health expansion and RTP employment without the premium of Chapel Hill or downtown Durham. The 1990s-2010s housing stock is ideal for cost seg, and rents have climbed 18% over the last 3 years as RTP employers expand.
#5
Apex
Nationally ranked 'Best Place to Live' with small-town charm and rapid growth
Price
$475K
Rent
$2,250
Yield
5.7%
Apex has been named a top place to live nationally multiple times, driving sustained demand. New construction from major builders (Toll Brothers, Lennar) keeps inventory flowing. The premium demographic (median household income $110K+) makes for exceptionally reliable tenants.
$475K$2,2505.7%
Apex has been named a top place to live nationally multiple times, driving sustained demand. New construction from major builders (Toll Brothers, Lennar) keeps inventory flowing. The premium demographic (median household income $110K+) makes for exceptionally reliable tenants.
Apex has been named a top place to live nationally multiple times, driving sustained demand. New construction from major builders (Toll Brothers, Lennar) keeps inventory flowing. The premium demographic (median household income $110K+) makes for exceptionally reliable tenants.
Local Partners

Investor-Friendly Partners in Raleigh-Durham, NC

Overline-vetted brokers, property managers, and service providers serving real estate investors in Raleigh-Durham, NC.

NC Capital Group logo
NCG
NC Capital Group
Investor-Friendly Broker

North Carolina real estate investment firm specializing in growing and emerging markets. 100+ years combined NC real estate experience with CCIM and CPM designations. Focus on apartments, bread-and-butter retail, and long-term hold strategies across Charlotte, Raleigh-Durham, and Greensboro-Winston-Salem.

Visit Website →
Pinewell Property Group logo
PPG
Pinewell Property Group
Preferred STR & LTR Management

Licensed Raleigh-based property management firm (NC License #C41436) handling both short-term and long-term rentals. Full-service management including multi-channel listing optimization, dynamic pricing, smart lock access, turnover coordination, and proactive property care. 4.9 average Airbnb host rating with 400+ five-star reviews.

Visit Website →
Insurance Agents

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

Coming Soon

Are you a broker, property manager, or insurance agent serving investors in Raleigh-Durham, NC?

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Frequently Asked Questions

Cost Segregation FAQ — Raleigh-Durham, NC

How much can I save with cost segregation in Raleigh-Durham, NC?

−

On a typical $420K property in Raleigh-Durham, cost segregation can yield approximately $37,027 in Year 1 combined federal and state tax savings at the 37% bracket, with a study ROI of 673%. Overline studies cost $499-$2,000.

What is the property tax rate in Raleigh-Durham?

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The effective property tax rate in Raleigh-Durham is approximately 0.72%. Wake County (Raleigh) rate is ~$0.5135 per $100. Durham County rate is ~$0.5560 per $100. Among the lowest in NC's major metros.

Is Raleigh-Durham a good market for real estate investing?

+

Research Triangle Park hosts 300+ companies with 60K+ employees. The 55% college-educated population creates America's highest-quality tenant pool — professionals earning $80K-$160K who pay rent on time and maintain properties. The STR-to-LTR hybrid strategy works exceptionally well here, with Year 1 tax savings of $30-35K through cost segregation.

What is the average insurance cost for rental properties in Raleigh-Durham?

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The average annual homeowner insurance premium in Raleigh-Durham is approximately $1,680. Raleigh-Durham enjoys some of the lowest insurance rates in NC due to its inland location and distance from the coast. Hail and wind from severe thunderstorms are the primary risks.

What are the STR and landlord rules in Raleigh-Durham?

+

Raleigh-Durham is rated "Very Friendly" for landlords. STR regulation: Varies by municipality. Eviction timeline: 30-45 days. Raleigh allows STRs with a zoning permit in most residential areas. Durham has more restrictive zoning for whole-home STRs. Check specific municipality rules before investing.

Who are the major employers in Raleigh-Durham?

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Major employers in Raleigh-Durham include Duke University/Health (40K+), NC State University (10K+), IBM (10K+), Cisco (5K+), Red Hat/IBM (4K+). Top industries: Technology, Healthcare, Education, Life Sciences, Clean Energy.

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