You Don’t Need a 1031 to Win on Taxes
Cost segregation accelerates deductions on property you already own — no exchange, no deadlines.
Fresh Basis, Full Power
On any taxable purchase, every dollar of your purchase price is fresh depreciable basis — the whole building is on the table for a cost segregation study. A 1031 buyer’s carryover basis keeps depreciating on the OLD property’s schedule; only the excess basis — the new money above the relinquished property’s basis — starts a new depreciation life (Treas. Reg. §1.168(i)-6). Buy taxably and there is no old schedule dragging along behind you.
Catch Up Without Amending
Already owned the property for years? You can catch up ALL of the accelerated depreciation you missed in ONE tax return, via an automatic Form 3115 accounting-method change (DCN 7). No amended returns. No sale required. Your CPA files the form with your next return — our study gives them the numbers.
No Clocks
A 1031 exchange runs on unforgiving deadlines: 45 days to identify replacement property, 180 days to close, and a qualified intermediary holding your money — for a fee — the whole time. Cost segregation has none of that. No identification windows, no closing countdowns, no intermediary fees. You order a study when it makes sense for your tax year, and that’s it.
When They Pair
This isn’t 1031-versus-cost-seg — the two can work together. After an exchange, a cost segregation study can accelerate depreciation on the replacement property’s excess basis (the new money above your carryover). And if an exchange falls through inside its deadlines, cost segregation deductions in the year of sale can help absorb the gain you suddenly have to recognize.
Already DID a 1031? Our dedicated 1031 Exchange Cost Seg service handles the carryover and excess basis split.
Honest Fine Print
- Depreciation recapture on sale. Accelerated deductions can come back when you sell: §1245 personal-property depreciation is recaptured as ordinary income, and unrecaptured §1250 gain on the building is taxed at up to 25%.
- Passive-activity limits.Rental losses generally offset other income only if you qualify as a real estate professional, or materially participate in a short-term rental. Otherwise the losses aren’t lost — they carry forward to future passive income or the eventual sale.
- State differences. Some states add back bonus depreciation, so the savings shown throughout this site are federal.
- Always confirm with your CPA. Your specific tax situation controls what these deductions are actually worth to you.