Slide your numbers and see a rough first-year federal deduction and tax savings from a cost segregation study — plus an honest note on how California changes the picture.
By Foad Nabi, EA · Enrolled Agent · California · June 2026
Rough first-pass estimate assuming 100% federal bonus depreciation on reclassified property. California is different — the state disallows bonus depreciation, so your California year-1 benefit is smaller and spread over 5–15 years. This tool estimates the federal figure only and does not account for passive-activity limits on whether you can use the loss. Educational estimate, not advice.
The tool takes your purchase price, removes the land (which never depreciates), and applies a typical reclassification percentage for your property type to estimate how much of the building moves into short-life property. Under current federal law, that reclassified amount is eligible for 100% bonus depreciation — so it can be deducted in year one. Multiply by your marginal rate and you get a rough first-year tax savings.
It is deliberately a first-pass number. A real engineering study will produce a defensible, component-by-component figure that can be higher or lower than this estimate. What the tool is for is answering one question quickly: is this even in the range where a study makes sense?
It does not apply the California rules — the state disallows bonus depreciation, so your California year-1 benefit is much smaller and spread over years. And it does not check whether the passive activity rules let you use the loss this year. Both are essential to the real decision, and both are covered in the articles below.
If the estimated savings comfortably exceed a few thousand dollars and you can use the loss this year, a study is very likely worth it. If the number is large but your income is passive and you’re not a real estate professional or short-term-rental operator, the timing math matters more than the headline. Either way, the next step is a real study with a correct federal-and-California return behind it.
Want to go deeper first? Start with what cost segregation is, then the California rules and whether you can use the deduction.
Foad is a federally licensed Enrolled Agent who writes about tax and bookkeeping for small businesses.