Depreciable building and improvement basis after excluding land
COST SEGREGATION DECISION GUIDE
Updated October 11, 2026 · Individual tax treatment requires CPA review
Is a cost segregation study worth it? Compare the usable benefit with the cost.
It can be worthwhile when the federal deductions you can actually use, and the value of receiving them sooner, justify the study fee and fit your ownership plan. Purchase price alone does not answer the question. Compare depreciable basis, Year 1 timing, deduction limits, the written fee and possible sale consequences with your CPA before ordering a study.
- ✓ Free quote before payment
- ✓ Scope confirmed in writing
- ✓ California statewide
WHY IT MATTERS
Start with the facts. Confirm the scope.
Start with the property, not a universal dollar threshold. Land is not depreciable, and depreciation begins when eligible property is placed in service. A study may move supported basis into shorter recovery periods, but passive-activity, basis and at-risk rules can delay the current benefit. If a sale may happen soon, adjusted basis and depreciation recapture also belong in the comparison. The calculator below estimates the federal Year 1 timing opportunity; it does not decide whether that opportunity is usable or produce a net return for your tax situation.
Plain English: you are not creating a new deduction. You are identifying when supported pieces of the property may be depreciated.
Primary guidance: IRS Publication 946: basis, placed-in-service and depreciation rules · IRS Publication 925: passive-activity and at-risk rules · IRS Publication 544: dispositions and depreciation recapture
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 shows estimated federal Year 1 tax savings and a separate estimated study fee. It does not apply passive-activity, basis, at-risk, income, California or sale-level rules. Use the result to frame the decision with your CPA, not as a guaranteed net benefit.
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
A practical worth-it checklist
Regular versus accelerated federal Year 1 deductions
Deductions the owner can actually use now or later
Written study fee and any property-specific scope
Expected holding period and possible disposition treatment
Federal and California schedules reviewed with the CPA
DOES IT FIT?
Strong candidates usually have four things.
✓
Rental or business use and placed-in-service timing are documented
✓
The property has supported depreciable basis
✓
Earlier deductions may be usable within the ownership plan
✓
The expected benefit is reviewed separately from the study fee
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.
Is cost segregation worth it for a rental property?+
It may be worthwhile when the deductions you can use outweigh the study cost. Start with the calculator, get a free quote, and have your CPA compare the fee with your potential benefit.
What property value makes cost segregation worth it?+
There is no single purchase price that works for every owner. Compare the supported depreciable basis, deductions you can actually use, study fee, holding period and potential sale consequences. The calculator and a written quote give your CPA the starting numbers.
How should I compare estimated tax savings with the study fee?+
Keep them separate. Review the calculator’s estimated federal Year 1 tax savings, the written study fee and whether your return can use the deductions now. Your CPA should also consider later depreciation and a possible sale before you decide.
Can cost segregation be worthwhile if my rental loss is limited?+
Possibly, but the current cash benefit may be delayed. Passive-activity, basis and at-risk limits can suspend deductions for later use. Have your CPA compare current and carried-forward benefits with the study fee and your plans for the property.
What if I expect to sell the rental property soon?+
Sale timing can change the decision. Earlier depreciation may affect adjusted basis and depreciation recapture when the property is sold. Ask your CPA to compare the near-term deduction with the expected sale treatment before ordering a study.
Is the calculator enough to decide whether to order a study?+
It is a planning screen, not the final decision. Use it to compare regular and accelerated federal Year 1 estimates, then confirm the property facts, written study fee, deduction usability and sale timing with your CPA.
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.
FREE PRELIMINARY PROPERTY SCREEN