Cost Segregation in Cleveland, OH

Home to the world-renowned Cleveland Clinic and one of the most affordable metros in America — Cleveland delivers exceptional cash-on-cash returns with Ohio's full bonus depreciation and 85% building-value ratios.

Population
2.0M
Median Home
$195K
Rent (3BR)
$1,350
Property Tax
1.89%
Annual Job Growth
10K+
Ranking
Healthcare Hub
Overview

Value Props for Investors

World-Class Anchor
Cleveland Clinic: 75K+ Jobs, Global Prestige

The #2 ranked hospital in the world employs 75,000+ people and attracts medical professionals from every state and country. This creates permanent, high-quality rental demand within a 15-minute radius.

Cash Flow King
$195K Median Price with 85% Building Values

Cleveland's depressed land values mean 85% of your purchase price goes toward depreciable building components. Combined with full bonus depreciation conformity, every cost seg dollar works harder here.

Low Insurance
Insurance Costs 48% Below National Average

At $1,100/year average, Cleveland's insurance costs are among the lowest for any major U.S. metro. This directly boosts your net cash flow and improves overall investment returns.

Tax Strategy

Cost Segregation & Tax Rules in Cleveland, OH

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

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Typical Purchase
$195,000
Building Value
85%
15% land / 85% building
Cost Seg Range
22-35%
of building reclassified
Home Age
55 yrs
Built ~1969
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 Cleveland, typical reclassification rates are 22-35% of building value.

Purchase Price Breakdown
Building 85%$165,750
Land 15%$29,250
Building Value Reallocation (with Cost Seg)
5-Year Property17%
$27,846
15-Year Property11%
$18,564
27.5 / 39-Year (Remaining)72%
$119,340

5 & 15-year components ($46,410 = 28% 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 $195,000 property with 85% building value and 28% reclassification yields ~$17,172 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 1969, Cleveland's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

Full Conformity
Ohio Bonus Depreciation Conformity

Ohio conforms to federal bonus depreciation under IRC Section 168(k). While OH uses a graduated income tax (currently 0-3.50%), cost seg reclassifications qualify for 100% first-year expensing on both federal and state returns, with the state benefit scaling with your income bracket.

What This Means for Cleveland Investors: Full conformity means cost seg benefits are maximized in Ohio. Federal AND state deductions apply in Year 1. Combined with Ohio's affordable property prices, the ROI per dollar invested is among the highest in the country.

Federal vs. OH Depreciation Timeline
PeriodFederal TreatmentOH State Treatment
Year 1100% bonus depreciation100% bonus depreciation (full conformity)
Years 2+Standard MACRS schedulesSame as federal
Section 179 Expensing
State ConformityConforms

Ohio conforms to federal Section 179 expensing. For investors in Columbus's new-construction market (driven by the Intel megafab), Section 179 captures qualifying personal property that accelerates beyond standard cost seg timelines.

Key Takeaway

A $215K property with a $183K depreciable basis and 28% cost seg reclassification yields ~$18,933 in federal tax savings PLUS ~$1,791 in OH state tax savings in Year 1 — a total of ~$20,724 on a very affordable property.

Bottom Line

Ohio is a full-conformity state. Every dollar of federal bonus depreciation flows through to your OH state return with no addback or modification. The low property prices amplify your effective ROI on every cost seg study.

Local Property Tax
1.89%
Cleveland effective rate
Transfer Tax
$1 per $1,000 of sale price (conveyance fee)
State Income Tax
3.50%
Top Rate (Graduated)
Property Tax Details

Cuyahoga County has one of the highest effective property tax rates in Ohio at ~1.89%. Factor this into cash flow projections. County reappraisal every 3 years.

Assessment Methodology
MethodMarket value at 35% assessment ratio
Reassessment CycleEvery 6 years (with triennial updates)
Assessment BodyCounty Auditor
Appeal WindowJanuary 1 – March 31 of the year following the tax year
Appeal Success Likelihood
Good
LowModerateGoodVery High

Ohio's 6-year cycle with triennial interim adjustments creates a unique appeal cadence. The Board of Revision (BOR) handles county-level appeals at no cost. Ohio law allows recent sale prices as strong evidence. High effective rates in Cuyahoga County (Cleveland) and Franklin County (Columbus) make appeals particularly impactful.

Work with Overline — Our team helps Cleveland 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 Cleveland, OH

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

Typical Cleveland, OH Property Details
$
50%95%
5%35%
2%25%
Total Reclassified28% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$165,750
$195,000 x 85%
Normal Annual Depreciation$6,027
$165,750 ÷ 27.5 yr (residential)
5-Year Reclassified$28,178
15-Year Reclassified$18,233
Total Accelerated$46,410
28% of $165,750 building value
Federal Tax Savings (Year 1)$17,172
$46,410 x 37% bracket
OH State Tax Savings (Year 1)$1,624
Total Year 1 Tax Savings$18,796
7.7x normal annual deduction captured in Year 1

OH State Tax: OH has full bonus depreciation conformity — both federal and state savings hit your pocket in Year 1.

Insurance & Risk

Insurance Landscape in Cleveland

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

Avg. Annual Premium
$1,100
Cleveland average
State Average
$1,200
48% below average
National Average
$2,300
for comparison
Key Risk Drivers
1
Lake-effect snow and ice
2
Severe thunderstorms
3
Basement flooding
Coverage Recommendations
Standard homeowner's policy with replacement cost coverage
Wind/hail deductible awareness (typically 1% of dwelling coverage)
Sewer/drain backup coverage (common in older Ohio cities)
Umbrella liability policy ($1M+) for rental properties
Cost Seg + Insurance Connection

Ohio's extremely low insurance costs are a major advantage for cash flow. A cost seg study documents component values that support accurate replacement cost estimates — particularly important for Ohio's older housing stock where original construction costs may not reflect current replacement values.

Revenue Comparison

STR vs. Long-Term Rental in Cleveland

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

Long-Term Rental
Monthly Rent (3BR)$1,350
Annual Gross$16,200
Vacancy Rate6%
Net Annual$15,228
Tenant StabilityHigh — healthcare workers and hospital staff provide reliable, long-term tenancies
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$110
Occupancy Rate62%
Annual Gross Revenue$24,900
Net Annual (after expenses)$17,430
Management20-25% of gross
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

Cleveland's ultra-affordable entry prices maximize your cost seg ROI. A $195K property generating $18.8K in Year 1 tax savings effectively means your tax benefit covers nearly 10% of the purchase price.

Market Fundamentals

Economy & Housing Demand in Cleveland

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

Median Income
$55,000
Rent-to-Income
24%
Healthy ratio
Vacancy Rate
5.5%
Pop. Growth
-0.2% annually (stabilizing)
Major Employers
1
Cleveland Clinic (75K+)
2
University Hospitals (30K+)
3
Progressive Insurance (10K+)
4
KeyBank (6K+)
5
Sherwin-Williams HQ (4K+)
6
NASA Glenn Research Center (3K+)
Top Industries
Healthcare
Insurance & Finance
Manufacturing
Technology
Aerospace
Landlord & STR Rules
Landlord Friendliness
Friendly
Eviction Timeline
30-45 days
STR Regulation
Permitted with registration

Cleveland allows STRs with a permit and lodging tax collection. The market is primarily LTR-focused given the healthcare and manufacturing tenant base, but STR demand exists near downtown attractions and the medical district.

Why Invest Here

Cleveland is a pure cash-flow market. The Cleveland Clinic alone employs 75,000+ people and draws medical professionals from around the world. At $195K median prices with 85% building values, the cost seg ROI per dollar is exceptional. Higher property taxes (1.89%) are offset by rock-bottom insurance ($1,100/yr) and entry prices that let you build a multi-property portfolio quickly.

Where to Invest

Top Neighborhoods in Cleveland

#1
Lakewood
Walkable inner-ring suburb
Price
$230K
Rent
$1,500
Yield
7.8%
Cleveland's most walkable suburb with vibrant restaurant scene. Strong renter demographic of young professionals near downtown.
$230K$1,5007.8%
Cleveland's most walkable suburb with vibrant restaurant scene. Strong renter demographic of young professionals near downtown.
Cleveland's most walkable suburb with vibrant restaurant scene. Strong renter demographic of young professionals near downtown.
#2
Ohio City / Tremont
Trendy urban
Price
$250K
Rent
$1,600
Yield
7.7%
Cleveland's hottest neighborhoods. Brewery district and West Side Market drive tourism STR demand alongside strong LTR fundamentals.
$250K$1,6007.7%
Cleveland's hottest neighborhoods. Brewery district and West Side Market drive tourism STR demand alongside strong LTR fundamentals.
Cleveland's hottest neighborhoods. Brewery district and West Side Market drive tourism STR demand alongside strong LTR fundamentals.
#3
University Circle / Little Italy
Medical & cultural district
Price
$200K
Rent
$1,400
Yield
8.4%
Adjacent to Cleveland Clinic and Case Western. Medical residents and students create year-round demand.
$200K$1,4008.4%
Adjacent to Cleveland Clinic and Case Western. Medical residents and students create year-round demand.
Adjacent to Cleveland Clinic and Case Western. Medical residents and students create year-round demand.
#4
Parma / Parma Heights
Affordable suburban
Price
$170K
Rent
$1,250
Yield
8.8%
Ultra-affordable entry with solid working-class rental demand. 85%+ building values make cost seg math exceptional.
$170K$1,2508.8%
Ultra-affordable entry with solid working-class rental demand. 85%+ building values make cost seg math exceptional.
Ultra-affordable entry with solid working-class rental demand. 85%+ building values make cost seg math exceptional.
Local Partners

Investor-Friendly Partners in Cleveland, OH

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

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.

Coming Soon

Are you a broker, property manager, or insurance agent serving investors in Cleveland, OH?

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Frequently Asked Questions

Cost Segregation FAQ — Cleveland, OH

How much can I save with cost segregation in Cleveland, OH?

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On a typical $195K property in Cleveland, cost segregation can yield approximately $18,796 in Year 1 combined federal and state tax savings at the 37% bracket, with a study ROI of 537%. Overline studies cost $499-$2,000.

What is the property tax rate in Cleveland?

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The effective property tax rate in Cleveland is approximately 1.89%. Cuyahoga County has one of the highest effective property tax rates in Ohio at ~1.89%. Factor this into cash flow projections. County reappraisal every 3 years.

Is Cleveland a good market for real estate investing?

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Cleveland is a pure cash-flow market. The Cleveland Clinic alone employs 75,000+ people and draws medical professionals from around the world. At $195K median prices with 85% building values, the cost seg ROI per dollar is exceptional. Higher property taxes (1.89%) are offset by rock-bottom insurance ($1,100/yr) and entry prices that let you build a multi-property portfolio quickly.

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

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The average annual homeowner insurance premium in Cleveland is approximately $1,100. Cleveland benefits from extremely low insurance costs — roughly half the national average. The primary risks are winter weather (lake-effect snow) and summer storms. Sewer backup coverage is recommended for older homes.

What are the STR and landlord rules in Cleveland?

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Cleveland is rated "Friendly" for landlords. STR regulation: Permitted with registration. Eviction timeline: 30-45 days. Cleveland allows STRs with a permit and lodging tax collection. The market is primarily LTR-focused given the healthcare and manufacturing tenant base, but STR demand exists near downtown attractions and the medical district.

Who are the major employers in Cleveland?

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Major employers in Cleveland include Cleveland Clinic (75K+), University Hospitals (30K+), Progressive Insurance (10K+), KeyBank (6K+), Sherwin-Williams HQ (4K+). Top industries: Healthcare, Insurance & Finance, Manufacturing, Technology, Aerospace.

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