Property background and supported depreciable basis
PLAIN-ENGLISH CALIFORNIA GUIDE
Reviewed August 17, 2026 · Updated for current federal bonus-depreciation guidance
Cost segregation without the tax jargon.
A building is normally depreciated over 27.5 years for residential rental property or 39 years for most nonresidential property. A cost segregation study identifies eligible pieces that may instead fall into 5, 7 or 15-year categories.
- ✓ No study work before payment
- ✓ CPA-ready final report
- ✓ California statewide
WHY IT MATTERS
Move eligible basis into faster recovery periods.
This does not create a new purchase price or duplicate a deduction. It changes when supported basis may be deducted. The owner receives earlier deductions and potentially more near-term cash, while the CPA considers passive-loss limits, bonus depreciation, state differences and future recapture.
Plain English: you are not creating a new deduction. You are identifying when supported pieces of the property may be depreciated.
WHAT WE REVIEW
What a professional study should contain
Methodology and engineering procedures
Asset-by-asset classification schedule
Legal rationale for classifications
Reconciliation to actual or supported costs
Assumptions, limitations and preparer credentials
SHOW ME THE NUMBERS
Simple $3 million example
Illustrative only. This assumes a 37% federal marginal rate where shown and that the owner can currently use the deduction.
- Property value
- $3,000,000
- Estimated depreciable basis
- $2,400,000
- Potential faster basis
- $480,000 to $840,000
- Potential upfront federal effect
- $178,000 to $311,000
- Study or comparison benchmark
- $5,000 to $15,000+
This is a timing illustration, not guaranteed permanent tax savings. California commonly requires a separate depreciation schedule because it generally does not conform to federal bonus depreciation.
DOES IT FIT?
Strong candidates usually have four things.
✓
Recently purchased or newly constructed property
✓
Large renovation or improvement program
✓
Older property without a prior study
✓
Owner can use additional depreciation
PORTFOLIO PRICING
More properties. Lower cost per study.
Order and pay for the properties together to receive a simple portfolio discount.
2 properties5% off3 to 4 properties10% off5+ properties15% off
STRAIGHT ANSWERS
Frequently asked questions.
Is cost segregation only for very large buildings?+
No. Study economics depend on depreciable basis, property type, documentation, tax rate and the ability to use the deductions. A free screen helps determine whether the likely benefit supports the cost.
Is a licensed engineer required to sign every report?+
There is no blanket federal rule requiring a PE stamp on every study. The IRS examination guide emphasizes construction knowledge, tax classification experience, methodology, documentation and engineering takeoffs. The proposal should identify the actual preparer and review scope.
Is the free estimate a completed study?+
No. It is an illustrative screen using the facts you provide. No engineering takeoff, professional certification or tax opinion is included. Technical work begins only after a signed and paid engagement.
Does my CPA need to approve the study first?+
No. It is smart to ask whether you can currently use additional depreciation, but the paid study does not require advance CPA approval. Your CPA makes the final filing decision.
Do you guarantee tax savings?+
No. A study accelerates the timing of eligible depreciation. Results depend on basis, property facts, placed-in-service dates, passive-loss rules, tax rates and the owner's filing position.
AUTHORITATIVE SOURCES
Reviewed against current IRS and California guidance.
Last reviewed August 17, 2026. Tax rules and procedures can change. Your CPA should confirm the law that applies to your acquisition date, placed-in-service date and return.
FREE PRELIMINARY PROPERTY SCREEN