The clean answer
Cost segregation is not magic. It is a depreciation timing strategy that separates building costs into categories with different recovery periods when the facts support that treatment.
The question is not only whether depreciation increases this year. The better question is whether the after-tax cash-flow benefit, recapture risk, passive loss profile, and study cost make sense together.
Good candidates
- Commercial buildings, short-term rentals, multifamily properties, and significant renovations with meaningful depreciable basis.
- Owners with taxable income or real estate professional status that can use accelerated losses.
- Properties with construction records, closing statements, invoices, appraisals, or renovation detail that support a study.
What to review first
- Purchase price allocation and land value.
- Closing statement, appraisal, construction draws, and renovation invoices.
- Placed-in-service date and bonus depreciation rules for the tax year.
- Passive activity limits, state conformity, and exit timing.