What it does
A cost segregation study has an engineer identify building components that qualify as shorter-life property (5-, 7-, and 15-year assets) instead of the standard 27.5 or 39 years. Those components depreciate much faster, and bonus depreciation can pull a large deduction into year one.
Is it worth the fee?
Studies cost money, so they pay off best on higher-basis properties where the accelerated deduction — and the time value of the tax savings — clearly exceed the fee. Use the calculator to estimate first-year savings before commissioning one.
The recapture tradeoff
Accelerated depreciation increases the amount subject to recapture when you sell, and some of it becomes ordinary-income (Section 1245) recapture. A 1031 exchange can defer that.
Frequently asked questions
How much can a cost segregation study save?
It depends on the reclassified percentage (often 20–30%), the bonus depreciation rate, and your marginal tax rate. The calculator estimates first-year savings.
When is it worth it?
Usually on higher-basis properties where accelerated deductions outweigh the study cost.
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.