Property Eligibility Checker

The eligibility checker uses a decision-tree logic system based on IRS depreciation rules and cost segregation best practices. It evaluates five core qualification criteria in sequence, assigning a qualification score based on responses. Properties meeting all criteria receive a "strong candidate" rating, while properties failing key requirements receive "not recommended" assessments.

The checker applies threshold tests at each step. Properties must clear minimum requirements for business use, depreciable status, value thresholds, and remaining depreciation potential. The tool also evaluates investor-side qualifications such as taxable income, tax bracket, and ability to use accelerated deductions given passive activity loss rules or other limitations.

Results provide preliminary qualification assessments with explanations. The checker explains which criteria the property meets or fails, suggests alternative strategies if cost segregation is not suitable, and provides next-step recommendations such as requesting formal estimates, consulting tax advisors, or exploring other depreciation strategies.

The checker evaluates whether the property is eligible for depreciation under IRS rules. Personal residences, land, inventory property, and property held for sale do not qualify. The property must be used in a trade or business or held for rental income production to meet the fundamental eligibility requirement.

It assesses whether the property value and remaining basis justify the cost of a professional study. Cost segregation studies typically cost $5,000 to $15,000. Properties below $500,000 often do not generate sufficient savings to cover study costs unless they have very high reclassification percentages or are combined with other properties in a portfolio study.

The checker evaluates investor tax profile to determine whether accelerated depreciation produces immediate benefits or creates suspended losses. Investors with high taxable income, real estate professional status, or active participation receive higher qualification scores. Investors with low income, passive-only status, or suspended losses may not benefit immediately from cost segregation despite property eligibility.

Question 1: Is this property used for business or rental income? This question determines fundamental IRS eligibility. Only property used in a trade or business or held for rental income can be depreciated. Personal residences, vacation homes without rental activity, and property held for personal use do not qualify for depreciation and therefore cannot benefit from cost segregation.

Question 2: What is the property value or cost basis? This question assesses financial viability. Properties over $1,000,000 almost always justify study costs if other criteria are met. Properties between $500,000 and $1,000,000 require evaluation of property type and tax bracket. Properties under $500,000 rarely produce ROI sufficient to cover professional fees unless combined with other properties.

Question 3: When was the property acquired or placed in service? This question evaluates remaining depreciation potential. Recently acquired properties have full basis available for reclassification and benefit from current bonus depreciation rates (60% in 2026). Properties held 4-10 years can use look-back studies to capture missed depreciation. Properties held over 10 years have limited remaining basis unless substantial improvements were made.

Question 4: Do you have taxable income to offset with depreciation? This question determines usability of deductions. Investors in high tax brackets with significant taxable income receive immediate cash flow benefits from accelerated depreciation. Investors with low income, net operating losses, or suspended passive losses may not benefit immediately, though deductions can carry forward.

Question 5: What type of property is this? This question assesses reclassification potential. Multifamily, retail, office, and hotel properties typically have 20-50% reclassification potential, producing strong returns on study costs. Self-storage and warehouse properties have lower percentages (10-20%) but can still qualify if value and tax bracket are favorable. Single-family rentals rarely justify individual studies unless part of a large portfolio.

Properties scoring "strong candidate" across multiple criteria almost always justify professional cost segregation studies. Moderate candidates may benefit depending on specific circumstances. Weak candidates should explore alternative strategies such as portfolio studies, simplified methods, or other depreciation planning approaches.

An investor is evaluating whether to pursue cost segregation on a newly acquired $2,500,000 multifamily property. The property was purchased in March 2026 and placed in service immediately. The investor has significant taxable income from W-2 employment and qualifies as a real estate professional. Federal tax bracket is 37%.

Using the eligibility checker, the investor answers the qualification questions. Question 1: Yes, income-producing rental property. Question 2: Over $1,000,000 ($2,500,000 value). Question 3: Acquired within the last 3 years (2026). Question 4: Yes, significant taxable income in high tax bracket. Question 5: Multifamily property with strong reclassification potential.

The checker assigns a "strong candidate" rating. All five qualification criteria are met. The property is depreciable, income-producing, above value thresholds, recently acquired with full basis available, owned by an investor with immediate ability to use deductions, and a property type with high reclassification percentages (25-35% typical for multifamily).

The checker estimates that a cost segregation study costing $8,000 to $10,000 would likely produce first-year tax savings of $120,000 to $180,000 (based on typical multifamily reclassification and 60% bonus depreciation in 2026). Estimated ROI: 12:1 to 22:1 in year one alone. The checker recommends proceeding with a formal cost segregation proposal.

The eligibility checker is most useful as an initial screening tool before engaging cost segregation firms or tax advisors. Investors can quickly assess whether their property meets basic qualification criteria, avoiding wasted time on properties that do not justify detailed analysis.

Checkers help investors prioritize properties in multi-property portfolios. By running eligibility checks on each property, investors can rank properties by qualification strength and address the strongest candidates first, maximizing tax planning efficiency and resource allocation.

The tool is valuable when evaluating properties during acquisition due diligence. Knowing whether a target property qualifies for cost segregation allows investors to factor potential tax savings into cash flow projections and return assumptions before closing the transaction.

Eligibility checkers provide preliminary assessments based on simplified criteria and cannot account for complex tax situations. Passive activity loss limitations, at-risk rules, alternative minimum tax, and entity structure considerations all affect whether accelerated depreciation produces immediate benefits. The checker cannot evaluate these investor-specific complexities.

Checkers use industry-average reclassification percentages and typical study costs. Your specific property may have more or less reclassification potential depending on construction details, finishes, systems, and improvements that only engineering analysis can identify. Actual savings may differ materially from checker estimates.

Results do not constitute tax advice or professional recommendations. Eligibility checkers are designed to inform preliminary screening decisions, not replace qualified cost segregation firms or tax advisors. Always consult professionals before making final depreciation strategy decisions or tax elections.

• Tax Strategy Tools Overview
• Cost Segregation Calculator
• Bonus Depreciation Calculator
• Cost Segregation Comparison Tool
• Depreciation Recapture Calculator (Advanced)
• Partial Disposition Calculator
• Cost Segregation Quiz