It depends. Depreciation deductions generated from cost segregation are considered "passive losses." These passive losses can only offset passive income unless you qualify as a real estate professional (REP) or meet other exceptions like short-term rentals that may not fall under passive income rules. If you qualify, it could help reduce your taxable income significantly, even as a high W2 earner.

Yes, a cost segregation study can still make sense even if you plan to sell. The accelerated depreciation can provide significant tax savings upfront, which can improve cash flow. However, keep in mind that selling the property may trigger depreciation recapture tax, which could offset some of the savings. A cost segregation study is most beneficial if you plan to reinvest through a 1031 exchange or have a strategy to manage recapture taxes.

Cost segregation studies can be done on properties acquired or constructed as far back as 1987. If your property is eligible, you can file a Form 3115 to "catch up" on missed depreciation for all prior years without amending past returns. This makes it a powerful tool for maximizing tax savings retroactively.

The ideal time to perform a cost segregation study is in the year the property is placed in service. However, it can be done any time after acquisition, even years later, through the IRS accounting change process.

The cost of our services depends on factors like the type, size, and complexity of your property. Typically, fees range between $1,000 and $20,000. However, the tax benefits often far outweigh the cost, making it a highly valuable investment.

Almost all types of commercial and residential rental properties are eligible, including:

• Apartment buildings
• Office buildings
• Retail spaces
• Industrial properties
• Hotels and resorts
• Warehouses
• Restaurants
• Self-storage facilities
• Single-family rental properties

If it generates income and qualifies as a depreciable property, it’s likely eligible for cost segregation.