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A cost segregation study costs $500\u2013$15,000 depending on the method and property size. Automated\/software studies: $500\u2013$2,000. Desktop studies: $2,500\u2013$5,000. Full engineering-based studies: $5,000\u2013$15,000. For most single-family rental properties ($200K\u2013$500K), a desktop study at $2,500\u2013$5,000 is the most cost-effective option. The study typically pays for itself in 1\u20133 years through additional tax savings.<\/p>\n<\/div>\n<\/div>\n
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<\/span>Is a cost segregation study worth it on a $200K rental property?<\/span><\/h3>\n\n
On a $200K single-family rental, cost segregation is marginally worth it \u2014 the additional tax savings roughly equal the study cost over 5 years. For properties under $200K, it is generally not worth it. Cost segregation becomes clearly beneficial on properties above $300K, multifamily properties, or for investors in the 32\u201337% tax bracket. A $450K duplex can generate $18,000+ in additional tax savings from a $5,000 study \u2014 a 373% ROI.<\/p>\n<\/div>\n<\/div>\n
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<\/span>Can I do a cost segregation study on a property I already own?<\/span><\/h3>\n\n
Yes \u2014 you can perform a cost segregation study on a property you have owned for years. You file IRS Form 3115 (Application for Change in Accounting Method) to switch from straight-line to accelerated depreciation. The IRS allows a “catch-up” deduction (called a Section 481(a) adjustment) for all the additional depreciation you missed in prior years \u2014 taken as a single deduction in the year of the change. This can create a very large one-time deduction.<\/p>\n<\/div>\n<\/div>\n
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<\/span>What is the difference between cost segregation and bonus depreciation?<\/span><\/h3>\n\n
Cost segregation identifies which components of your property qualify for shorter depreciation schedules (5, 7, or 15 years instead of 27.5 years). Bonus depreciation allows you to deduct a percentage of those shorter-lived assets in year 1. They work together: cost segregation identifies the assets, and bonus depreciation accelerates them further. In 2026, bonus depreciation is at 20% \u2014 meaning 20% of reclassified assets can be deducted immediately, with the rest following the 5\/7\/15-year schedule.<\/p>\n<\/div>\n<\/div>\n
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<\/span>Does cost segregation increase depreciation recapture when I sell?<\/span><\/h3>\n