Cost segregation report and asset-level basis
FEDERAL VS CALIFORNIA DEPRECIATION
Updated October 10, 2026 · Individual tax treatment requires CPA review
Federal deductions may arrive sooner. California can follow a different schedule.
Yes, the same cost segregation study can produce different federal and California depreciation deductions. Federal law may allow eligible shorter-life property to receive bonus depreciation, while California commonly requires a separate calculation. Our calculator shows a federal Year 1 estimate; your CPA must prepare and track the California adjustment.
- ✓ Free quote before payment
- ✓ Scope confirmed in writing
- ✓ California statewide
WHY IT MATTERS
Start with the facts. Confirm the scope.
A cost segregation study supplies supported asset classifications and basis allocations. It does not make the federal and California tax systems identical. Current IRS guidance provides a permanent 100% additional first-year deduction for eligible qualified property acquired after January 19, 2025. California's 2025 Form 3885A instructions identify additional depreciation under IRC Section 168(k) as a federal-state difference and require separate activity-level reporting when California and federal depreciation differ. Acquisition date, placed-in-service date, asset class, elections, passive-activity limits and the taxpayer's filing position still control the actual result.
Plain English: you are not creating a new deduction. You are identifying when supported pieces of the property may be depreciated.
Primary guidance: IRS 100% additional first-year depreciation guidance, January 14, 2026 · California 2025 Form 3885A instructions
YEAR 1 COMPARISON
Regular depreciation versus accelerated depreciation.
Regular schedule: the calculator estimates Year 1 federal depreciation using the building recovery period and placed-in-service assumptions shown with the result.
With cost segregation: the same calculator applies its approved shorter-life allocation and federal bonus-depreciation assumptions, then shows the extra estimated Year 1 deduction and tax savings. Move the inputs below to compare both paths; the result is a planning estimate, not a customer fact or guaranteed deduction.
Usability check: The calculator compares federal Year 1 tax savings only. It does not estimate California depreciation or apply taxpayer-level deduction limits. Use the result to size the federal timing opportunity, then ask your CPA for the separate California schedule and current-use analysis.
FREE SAVINGS CALCULATOR
How much more could you save in Year 1?
Move the sliders. See the difference. Get a free quote.
Cost segregation helps you deduct eligible property costs sooner. That may lower your taxes now. Choose your property type, purchase price and federal tax rate to compare estimated Year 1 tax savings. No email or payment needed.
An engineering based study reviews property records, components and supporting cost estimates to prepare depreciation schedules your CPA can use. This calculator gives a first look using broad property assumptions; the completed study refines your results.
Extra Year 1 tax savings
$50,280Estimated additional federal tax savings from cost segregation.
Compare Year 1 tax savings
Without cost segEstimated federal tax savings$11,347
With cost segEstimated federal tax savings$61,627
Your estimated study fee$3,995
Estimated standard remote study fee. We confirm records, scope and final price before payment.
No payment or card required to get started.
Estimate only. Assumes eligible property and deductions you can use. Actual results vary.
How it’s calculated
$61,627 with cost seg − $11,347 without = $50,280 extra tax savings. Figures are rounded to whole dollars so the comparison adds up.
The underlying Year 1 deductions are $30,667 without a study and $166,560 with a study. Multiply each deduction by your 37% federal tax rate to estimate the tax savings shown above.
Assumes 20% land, 16% of the building assigned to shorter life assets, and 100% federal bonus depreciation on eligible assets acquired and first used after January 19, 2025. The comparison uses a January start and 27.5 year building depreciation. The treatment of short term rentals depends on actual use.
Extra tax savings means the extra deduction multiplied by your 37% federal tax rate. This moves deductions forward; it does not increase the total cost you can deduct. State taxes, study fees and taxes on a later sale are excluded. Your CPA confirms the actual treatment and usable deductions.
IRS depreciation guidanceWHAT WE REVIEW
What your CPA needs to reconcile
Acquisition and placed-in-service dates
Federal bonus-depreciation eligibility and elections
Current federal and California fixed-asset schedules
California basis, recovery periods and annual adjustments
Passive-activity limits and expected use of deductions
DOES IT FIT?
Strong candidates usually have four things.
✓
The property produces rental or business income
✓
Federal bonus depreciation may affect the Year 1 result
✓
Asset basis and service dates are documented
✓
Your CPA can maintain separate federal and California schedules
PORTFOLIO PROPOSALS
More properties. One prioritized scope.
Group shared records, similar property types and inspection needs into a written rollout plan.
2–4 propertiesGrouped scope5–9 propertiesPrioritized rollout10+ propertiesMaster proposal
STRAIGHT ANSWERS
Frequently asked questions.
Does California follow federal bonus depreciation?+
California generally does not conform to federal bonus-depreciation rules, so separate state adjustments and schedules are commonly required. Your CPA should confirm the filing-year treatment.
Why can my federal Year 1 depreciation be higher than my California depreciation?+
Federal law may allow eligible shorter-life property to receive bonus depreciation, while California commonly requires a different depreciation calculation. Your CPA should track the federal and California schedules separately.
Do I need two cost segregation studies for federal and California taxes?+
Usually one property-specific study supplies the supported asset classifications. Your CPA then applies the federal and California rules and maintains the separate depreciation schedules required for the return.
Is a California depreciation adjustment the same as losing the deduction?+
Not necessarily. A federal and California difference is often a timing and schedule difference, but the state basis and recovery period must be tracked correctly. Your CPA should calculate the filing-year adjustment and later depreciation.
Why does the calculator show federal tax savings instead of California tax savings?+
The calculator models a federal Year 1 comparison under its stated assumptions. California does not simply follow the federal bonus-depreciation result, so a California estimate requires a separate schedule prepared from the property and taxpayer facts.
Can passive-activity limits still delay the federal or California benefit?+
Yes. A valid depreciation amount may still be limited by passive-activity, at-risk, basis or other return-level rules. Cost segregation does not determine whether the deduction is currently usable.
AUTHORITATIVE SOURCES
Primary tax references.
Tax rules and procedures can change. These links are general references, not approval of a taxpayer’s position. Your CPA should confirm the law that applies to your acquisition date, placed-in-service date and return.
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