Cost segregation is gaining attention again in 2025 thanks to the return of 100% bonus depreciation. But many property owners still aren’t sure whether it applies to them—or if it’s worth the effort.
At Pacific Skyline, we work with both commercial and residential real estate investors to determine when a cost segregation study can deliver a strong return. If you’re wondering whether it’s the right move for your property, here’s a quick breakdown.
Who Benefits Most from Cost Segregation?
Cost segregation is most valuable for:
- Owners of newly purchased or newly constructed buildings
- Owners of properties that have undergone renovations
- Investors with high rental income and high tax liability
- Anyone placing a property in service from 2017 - present will be able to take advantage of bonus depreciation of some sort
- Owners of commercial buildings, multifamily complexes, and even high-value single-family rentals
That said, even a modestly-sized rental property can benefit—especially when paired with long-term tax planning. A $500,000 property might see $100,000 or more shifted into short-life assets that can be depreciated immediately under bonus rules.
When to Do a Cost Segregation Study
Ideally, the study should be done in the same tax year the building is placed in service. That maximizes the available deduction and avoids amended returns.
However, if you missed the opportunity in a prior year, it’s not too late. The IRS allows taxpayers to file Form 3115 (Change in Accounting Method) to catch up on missed depreciation without amending prior-year returns. This is especially useful for properties placed in service in the last several years that didn’t use cost segregation at the time.
In some cases, amended returns may be the better option—especially if the property was placed in service recently and you're looking to reclaim tax paid. We are full-service and partner with tax preparation and planning company Solvent LLC who will take care of all of the IRS filings and amendments.
Common Misconceptions
“It’s only for large commercial buildings.”
Not true. While larger properties have more components to reclassify, we’ve seen meaningful results even for single-family rentals and duplexes.
“I missed the window—too late to do it now.”
You can go back and claim missed depreciation via Form 3115 or an amended return, even if you’ve owned the property for several years.
“It’s a tax loophole.”
Not at all. Cost segregation is supported by IRS guidelines and is a legitimate tax strategy when backed by a qualified engineering-based study.
Why Work With Pacific Skyline, Inc?
Unlike third-party cost seg vendors that don’t understand your building, Pacific Skyline is a structural engineering firm. Our team uses actual building plans, field observations, and construction knowledge to produce accurate, defensible studies that stand up to IRS scrutiny. That means better classification, less risk, and bigger potential savings.
If you’re thinking about a study—or wondering whether it’s worth revisiting a past property—Pacific Skyline can help you evaluate the numbers. From technical building analysis to coordinating with your tax preparer, we’re here to help you maximize your depreciation and stay compliant.
Reach out today for a cost segregation consultation.