Cost segregation pays off when the first-year deduction is big enough to matter. Our rule of thumb: it should clear $100,000. Set your property and pick how you’d use it.
Simple estimate, not tax advice. First-year deduction is modeled as building basis (property value less an assumed 20% land) times the share of the home placed in service as a rental, times a cost-segregation reclassification rate (about 30% for an existing home, higher for a remodel with a tear-out disposition or a new build with more short-life property and land improvements), with 100% bonus depreciation. Real results depend on a cost segregation study, the average-stay and material-participation tests, and your tax situation. Confirm with your CPA.