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Which financing fits?

Is a cost segregation study worth it?

A study moves part of your building into short-life property that can be expensed now, and in 2026 bonus depreciation is back to 100%. This estimates the first-year tax benefit against the study's cost, so you can see whether it pays before you commission one.

Purchase price or construction cost minus the land value. Land doesn't depreciate.

The study sets this. Typically 10–15% for a plain warehouse, 20–30% for apartments or offices, 30–40% for hotels and restaurants.

Federal plus state marginal rate on the income the deduction shelters.

Engineering-based studies typically run $5,000–$15,000.

First-year estimate

Read this before you commission one

The number above is a first-year cash benefit, and it is real, but it is a deferral, not a discount. You're pulling deductions forward, not creating new ones, so later years have less to deduct, and when you sell, depreciation recapture takes some of it back. The true economic gain is the time value of holding that cash for years, which is large when you'll keep the building a long time and small if you're about to flip it.

The rule of thumb the study firms won't lead with: below roughly $500,000 of building basis, a fixed study fee often eats too much of a modest benefit to bother, especially without 100% bonus. Above a few million, it's usually a straightforward yes. The calculator shows you where your own numbers land.

100% bonus depreciation for property acquired after Jan 19, 2025: IRS, One Big Beautiful Bill provisions (IRC 168(k), Notice 2026-11), verified July 2026. Estimate only, not tax advice.

Stacked bar showing a building split into 75% 39-year structure, 8% 15-year site work, 7% 7-year fixtures, and 10% 5-year finishes.
What the study actually does: it moves parts of the building out of the 39-year bucket into 5, 7, and 15-year buckets. The estimate above assumes a reclassified share in that range. Editorial illustration, TreasuryClear.

Why the first-year number is so large

Reclassified property is eligible for 100% bonus depreciation again, so the deductions that used to spread over decades land in year one. That's the swing the calculator is showing, and it's why the study fee is small against the benefit for the right building.

Bar chart comparing a first-year tax benefit against the cost of the study.
The comparison that decides it: the first-year tax benefit against the study fee. When the bar on the left dwarfs the one on the right, the study pays for itself immediately. Editorial illustration, TreasuryClear.
A modern apartment building with rows of balconies against a blue sky.
It works best on buildings with a lot of non-structural content: apartments, medical offices, restaurants, hotels. More fixtures and finishes means more to reclassify. Photo: Dominik via Pexels. Pexels License.

When it's worth commissioning

The fee only pays off if you'll hold the property long enough to keep the accelerated deductions, and if your basis is high enough for the reclassified share to matter. Newly bought, built, or renovated buildings are the usual candidates.

A steel-frame commercial building under construction with a tower crane against a blue sky.
A study on a new build or major renovation can lean on actual construction records, which makes it cheaper to run and easier to defend. Photo: SSJF01 via Wikimedia Commons. CC0.
A modern mixed-use building complex with staggered floors and balconies.
On a larger or mixed-use property the reclassified share, and the fee, both scale up. Run your own basis and holding period above before assuming the study makes sense. Photo: Diana via Pexels. Pexels License.