Single-Tenant Net Lease · QSR · Pharmacy · C-Store · Bank · Medical Pad
You own the building and the dirt.
The lease is net — the depreciation isn’t. The tenant covers opex, but your acquisition basis still holds an estimated 20–35% that reclassifies into 5-, 7-, and 15-year recovery.
Estimate this asset →of basis typically reclassifies — varies widely by tenant build-out
the landlord’s cost basis is what reclassifies, net lease or not
carryover vs. excess basis — the interaction the guide covers
What reclassifies
The pad does the heavy lifting.
On a single-tenant parcel, the parking field, signage, and drive-thru infrastructure often outweigh the building itself in reclassification terms — and all of it is measured from the landlord’s basis.
Shell and structure stay 39-year. Everything labeled above is measured from the landlord’s basis — the lease structure doesn’t change whose depreciation it is.
Worked example · estimated
One QSR pad, modeled.
About these figures. Representative example, not a client result. Reclassification percentages are engineering estimates and vary widely by tenant build-out; year-1 figures are modeled tax estimates. Actuals depend on §481(a) adjustments, the bonus rate for the placed-in-service date, state conformity, §469 passive-activity limits, and entity structure. 1031 carryover basis is modeled separately — see the guide. Ranges, not promises.
The NNN question
You exchanged into this asset. Now what?
Most NNN buyers arrive via 1031 — and carryover basis changes what a study can touch. The guide walks the carryover vs. excess basis interaction, with every tax-side figure labeled estimated.
Read: 1031 exchanges and cost segWho · and how
For 1031 exchangers, passive investors, and syndications.
Engineering-based studies per IRS Publication 946 and the cost segregation Audit Techniques Guide (Pub 5653). Named credentialed engineering partners are brought in per engagement for larger mandates.
Acquisition review
Closing statement, lease abstract, and basis detail — including carryover and excess basis where a 1031 is involved.
Site & build-out takeoff
Engineering-based quantification of site improvements and the owner-funded portion of the build-out.
Classification
Components assigned recovery periods under IRS Pub 946, per the cost segregation Audit Techniques Guide (Pub 5653).
Deliverable
A filing-ready study: classification schedule, basis allocation, and component-level support for your CPA.
Questions
Asked by net-lease owners.
The tenant pays for everything — is there really anything left for me to depreciate?
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Yes. A net lease shifts operating expenses, not ownership. The landlord’s cost basis — the building, the parking field, the signage, the site work — is what gets reclassified. Tenant-paid opex never enters the equation; your acquisition basis does.
I acquired this pad through a 1031 exchange. How does carryover basis interact with a study?
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A 1031 exchange carries your old basis forward into the replacement pad, often with a smaller excess-basis layer from any new cash. A study can reclassify components of both, but the carryover and excess layers are treated differently — and that allocation drives how much accelerates. It is the most-asked NNN question; the 1031 guide walks it, with every tax-side figure labeled estimated. Your CPA confirms the treatment for your return.
My income is passive. Do the §469 limits swallow the benefit?
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Not necessarily. §469 governs when accelerated losses are usable, not whether the study is worth doing — the reclassification is the same either way. Passive losses can offset passive income or carry forward until you have passive income or a disposition. Whether they offset other income depends on material participation or real-estate-professional status; your advisor determines how §469 applies to your facts.
Does tenant build-out I didn’t pay for get counted?
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No. A study reclassifies only what sits in the landlord’s cost basis. Tenant-funded improvements belong to the tenant’s depreciation schedule, not yours — the engineering takeoff documents which side of the lease paid for each component, so the study counts only your basis.
Estimate your net-lease asset.
Property type prefilled — about two minutes. Pricing is listed at the order page.