Cost segregation is not right for every property. Five conditions do most of the work in deciding, and you can check all five in about a minute. Answer yes to every one and a study almost certainly pays for itself; a no on any of them tells you something specific about why it might not.
1. Is your property worth $200K+?
Below roughly $200K of basis, the study fee starts to eat the benefit. There is nothing wrong with the analysis at that size, the arithmetic just stops favoring it. Standard straight-line depreciation is the right call.
2. Do you plan to hold it for 3+ years?
Cost seg still works for short holds, but depreciation recapture on sale gives back part of what you accelerated. The shorter the hold, the more of the Year-1 benefit you hand back at exit. Under about three years, run the numbers before you commit rather than assuming either way.
3. Is the property generating rental income (or will it soon)?
Depreciation is a deduction against income from the property. You need rental income or business use to claim it at all, so a personal residence does not qualify. A property you are about to place in service does.
4. Are you in a 24%+ tax bracket?
A deduction is worth your marginal rate. Lower brackets still benefit, the dollar savings are just smaller, which shifts where the break-even sits. Below 24%, a study is generally worth it above about $300K of property value.
5. Have you already done a cost seg study on this property?
Then you are already set on this one. The reclassification has been made and there is nothing further to accelerate. Consider a study on your next acquisition instead.
If you answered yes to all five
A study typically reclassifies 20-28% of building basis out of the 27.5- or 39-year bucket and into 5-, 7-, and 15-year property. With 100% bonus depreciation permanent under OBBBA for property both acquired and placed in service after January 19, 2025, that entire reclassified amount is deductible in Year 1.
Typical Year-1 savings run $15,000 to $50,000+, but that range is wide because it depends on property value, property type, and your bracket. It is an illustrative range, not a projection for your property. The free preliminary analysis returns a figure for your actual address in about 60 seconds.
What about a property you have owned for years?
You do not lose the deduction by having waited. A lookback study catches up all the depreciation you could have taken, claimed in the current year via Form 3115 without amending prior returns. The five questions above still apply, with the hold-period question asked about the years ahead rather than the years behind.