Should I Cost-Segregate?
Answer a few questions about your property and find out if a cost segregation study makes financial sense for your situation.
A guide by Taxstra Tax & Accounting — CPA-led tax strategy for business owners
This interactive tool helps you determine if a Cost Segregation study makes financial sense for your specific property. By answering a few simple questions about your purchase price, holding period, and tax status, you'll see if you're a good candidate for accelerated depreciation.
Property Purchase Price
What is the purchase price of the building? (Exclude land value if known, otherwise estimate Total Price)
Cost segregation studies have a fixed cost (usually $2k-$5k). If the tax savings don't significantly exceed this cost, it's not worth doing.
Not legal or tax advice. Results are estimates based on standard scenarios.
Consult a qualified CPA before filing.
What Is Cost Segregation?
One of the most powerful tax strategies available to real estate investors.
Cost segregation is an engineering-based study that identifies building components eligible for accelerated depreciation schedules, allowing property owners to significantly reduce their taxable income in the early years of ownership.
Accelerated Cash Flow
By front-loading depreciation deductions, you reduce your tax bill now—freeing up cash for additional investments or debt paydown.
Works With Bonus Depreciation
When combined with bonus depreciation rules, cost segregation can generate massive Year One deductions—sometimes offsetting the entire purchase price.
Any Property Type
Cost segregation works for residential rentals, commercial buildings, hotels, medical facilities, and even tenant improvements.
The Mechanics of Depreciation
Understanding the 'Buckets' is key to maximizing your tax savings.
The IRS allows us to break a building down into its individual components, each with its own lifespan.
Bonus Depreciation Status
- 2023: 80%
- 2024: 60%
- 2025: 40%
1. The Asset Buckets
A standard residential rental depreciates over 27.5 years. A commercial building over 39 years. That's a long time to wait for your money.
2. The "Time Value" Arbitrage
By identifying 20-30% of the building's value as "5-year" or "15-year" property, we can accelerate that deduction into Year 1 using Bonus Depreciation. A $100,000 deduction today (at a 37% tax rate) puts $37,000 cash in your pocket now. If you waited 27.5 years, inflation would have eroded that value significantly.
3. The Recapture Warning
Frequently Asked Questions
Common questions about cost segregation studies and how they work.
Ready to See Your Potential Savings?
If the flowchart above suggested you're a good candidate, the next step is a personalized analysis. Our team works with trusted cost segregation engineers to get you precise numbers.
Find Out What You're Overpaying in Taxes
Book a free 30-minute call to walk through your situation. We'll tell you exactly how our CPA-led team can help — and whether we're the right fit.