A cost segregation study is not free. So the real question is simple: does it save you more than it costs? For most owners, the answer is yes, often by a wide margin. But not always. This guide shows you how to tell.
The basic math
A study pays off when the tax it saves is bigger than the fee you pay. Our fees are flat and published. Self-Serve home rental studies start at $497. Expert Reviewed studies, checked and signed by an accountant at our sister firm, start at $2,500 and step up with the property's value. Commercial starts at $1,497. See full pricing.
Now compare that to the savings. Year-one federal savings often run 5% to 10% of the building's cost for a rental home. So on a $400,000 rental, that is $20,000 to $40,000 in faster deductions. At a 32% tax rate, that can put $6,000 to $13,000 back in your pocket in the first year alone.
Rule of thumb: if your building's cost is above about $200,000, a study almost always saves far more than it costs. Below that, it can still work, but the math is closer.
Does it save more than it costs? For most owners, yes, by a wide margin.
When it is clearly worth it
- You bought a building worth $200,000 or more (not counting the land).
- You have income this year that the extra deductions can offset.
- You plan to hold the property for at least a few more years.
- You own a short-term rental and materially participate. The losses may offset your regular income. See how this loophole works.
When it may not be worth it
- You plan to sell the property very soon. Selling can bring back some of the savings as tax, called recapture.
- You have no income this year to use the deductions against, and you are not a real estate professional or short-term rental host.
- The building cost is small, so the fee eats up most of the benefit.
Even in these cases, a study can still help. Losses you cannot use this year carry forward to future years. We help you see the full picture before you decide.
What about a building I have owned for years?
Good news: you do not lose the chance. A study can apply to a property you have owned for a while. You claim every deduction you missed in one catch-up, using Form 3115. No amended returns needed.
How to know your number first
You do not have to guess. Our free estimate gives you a year-by-year projection for your exact property before you spend anything. You see the savings, the fee, and the net benefit side by side.
Next step: See your savings range in seconds. If the number does not work for you, there is no cost and no pressure.
This guide explains general tax ideas in plain words. It is not tax advice for your specific situation. Savings examples are illustrations, not promises. Your study and tax positions are reviewed by a licensed tax professional. Always confirm the plan with your own advisor.