# costsegworthit.com

> A free decision tool that tells real estate investors whether a cost segregation study is worth doing — including when it is **not**. Five questions, 90 seconds, returns YES / MAYBE / NO with a year-1 federal tax savings range. Operated by Cost Seg Smart LLC ([costsegsmart.com](https://costsegsmart.com)).

## The 30-second answer

Cost segregation only makes sense when **three things** are true: **(1)** the property generates rental income, **(2)** you can actually use the resulting losses against other income, and **(3)** the purchase price is large enough — usually **~$300K+** — to clear the **$3K–$8K** study fee. Most properties fail at least one. For the ~30% that pass, year-1 federal tax savings typically run **$20K–$80K** on a residential rental.

## What the tool does

The decision tool takes five inputs (property type, purchase price, placed-in-service year, federal tax bracket, planned hold period) and returns:

- **A verdict**: YES, MAYBE, or NO
- **A year-1 tax savings range** (federal only) when the math works
- **The reasons** the math does or doesn't work for the specific property

The tool returns NO when the math is genuinely bad — e.g. primary residences (not eligible), holds under 2 years (recapture wipes the benefit), basis under $200K (study fee exceeds present-value benefit), or 12% bracket (each $1 of deduction is only worth $0.12).

## When a cost segregation study is NOT worth it

- Plan to sell within ~2 years — depreciation recapture claws back the benefit
- Property basis under ~$200K — study fee ($3K–$8K) exceeds the value
- 12% federal bracket — each $1 of deduction is only worth $0.12
- Primary residence — only income-producing property qualifies
- No passive income to offset and not a real estate professional — losses get suspended (delayed, not lost, but IRR drops)

## When it IS worth it

- Residential rental, basis $300K+, 24%+ bracket, 4+ year hold
- Short-term rental with material participation — non-passive treatment unlocks W-2 offset
- Commercial/owner-operator with $500K+ basis and long hold
- Properties placed in service 2022–2024 (still get 60–100% bonus depreciation)
- Look-back studies on properties owned 3+ years — Form 3115 catch-up adjustment is often the largest single benefit

## Typical year-1 federal tax savings

| Property | Price | Bracket | Hold | Verdict | Year-1 savings |
|---|---|---|---|---|---|
| Phoenix duplex (rental) | $650K | 32% | 10 yrs | YES | $32K–$42K |
| Nashville STR | $850K | 35% | 7 yrs | YES | $46K–$60K |
| Austin office condo | $1.2M | 37% | 12 yrs | YES | $69K–$89K |
| Suburban SFR | $280K | 22% | 5 yrs | MAYBE | $7K–$10K |
| House flip (1 year hold) | $450K | 24% | 1 yr | NO | $0 (recapture) |
| Primary residence | $700K | 32% | 10 yrs | NO | $0 (not eligible) |

## Methodology (decision logic)

- **Hard NO**: primary residence (not eligible); hold under 2 years (recapture); basis under $200K (fee exceeds benefit)
- **Score** = 0.5 + adjustments for basis tier, bracket, hold, bonus rate, property-type quirks
- **Verdict thresholds**: score ≥ 0.75 → YES; < 0.45 → NO; otherwise MAYBE
- **Year-1 deduction range** = (building basis × 25% reclass) × (30% to 30%+70%×bonus_rate)
- **Building basis** ≈ 80% of purchase price (land excluded)
- **Reclassification %** = 25% (planning midpoint; engineered studies typically deliver 20–30%)
- **Bonus depreciation** = year-specific (2022 100%, 2023 80%, 2024 60%, 2025–2026 40%; assumes phase-down per current law)

## Parent organization

costsegworthit.com is a vertical of **Cost Seg Smart** ([costsegsmart.com](https://costsegsmart.com)) — an automated cost segregation provider. Same team, same engineering methodology. This site decides if the study is worth doing; costsegsmart.com delivers the actual 40+ page IRS-defensible study from $495.

## Contact

- Email: support@costsegsmart.com
- Phone: (213) 444-2776
- Order a study: https://costsegsmart.com/order/