Cost segregation
Estimate the deduction. Then check whether you can use it before paying for a full study.
Start with a rough estimate
Enter a few property details to see an initial range.
Which costs may depreciate faster?
Records help identify building components and land improvements with shorter recovery periods.
Can you use the deduction now?
Passive-activity, basis, and at-risk rules may defer the added loss.
What happens when you sell?
Review recapture, state tax, and expected sale timing.
Estimate only. Actual results depend on the property records, tax rates, loss limits, and reporting.
Before you order a study
Most often used for newly acquired, built, or substantially renovated income-producing property.
- 01
Can the deduction be used now?
Review the placed-in-service date, ownership, passive income, basis, and at-risk limits.
- 02
What will the engineering study cover?
A qualified provider analyzes the records and identifies shorter-life components.
- 03
How does the report reach the tax return?
The report must flow into depreciation schedules and, when needed, Form 3115.
Common questions
What does a cost segregation study do?
It analyzes a building and its components so qualifying costs can be assigned to the appropriate depreciation categories and recovery periods. Land is not depreciable.
Can cost segregation reduce tax on W-2 income?
Not automatically. Rental activities are generally passive, and passive-activity, basis, and at-risk rules can limit current use of losses. The answer depends on the owner's complete facts.
Can an older property still be studied?
Possibly. If prior depreciation treatment must be changed, the owner may need Form 3115 and a §481(a) adjustment. A catch-up deduction is not automatic for every older property.
Is the calculator result a guaranteed tax saving?
No. It is an illustrative estimate. Actual deductions and tax effects depend on the property, applicable law, tax rates, when losses can be used, and correct reporting.
Cost segregation reading list
Three practical guides on eligibility, timing, and common traps.
