When a cost segregation study is not worth it

Cost segregation is often presented as something every owner should do. That is not the case.

Situations to think twice

• A low purchase price, where the fee is large relative to the benefit.
• No taxable income the deduction can offset.
• A plan to sell soon, when recapture may reduce the gain from accelerating.
• A property that is mostly land value.

How to decide

Compare an estimate of the first-year benefit with the study fee, then ask your CPA whether you can use the deduction. A snapshot gives you the first number.