Cost Segregation Articles
In-depth, OBBBA-current explainers from primary IRS sources. Each article walks through one cost-seg topic with worked examples and links to a calculator that estimates the numbers for your specific property.
Cost Segregation for Restaurant Owners: 22%+ in 5-Year Property
Restaurant buildings reclassify materially higher than typical commercial — IRS CSATG Ch. 7.6 supports a 22% 5-year personal property baseline, with full-service ranges 25–35% and QSR/chain 35–42%. Worked $1.2M acquisition example, OBBBA 100% bonus, FF&E vs. build-out, and §1245 recapture.
Cost Segregation for Apartment Complex Owners: 13% 5-Year + Common-Area Reclassification
Apartment complexes use the residential 27.5-year schedule (not 39-year) and reclassify common areas — pool, leasing office, fitness center, parking — separately from in-unit finishes. Worked $5M, 50-unit example, OBBBA 100% bonus, §469 passive-activity gating.
Real Estate Professional Status: The 750-Hour Test and Why It's the Difference Between a Cost-Seg Win and a Wasted $5K
Without REPS, cost-seg losses on a long-term rental suspend on Form 8582 — the year-1 deduction is real but unusable against W-2. The two-prong §469(c)(7) test, audit risk, and how to know if you actually qualify.
Cost Segregation for Short-Term Rentals in 2026: The 7-Day Rule, Material Participation, and the Real Numbers
How cost segregation works for Airbnb / VRBO / vacation rentals — the §469(c)(2) 7-day rule, material participation, and the recapture trap on short flips. With a worked $750k example.
When the §163(j) Real Property Election Kills Your Cost Segregation Case
The §163(j)(7)(B) electing-real-property-trade-or-business avoids the interest expense limit but forces ADS on the building — no bonus on the 39-yr shell, though 5/7/15-yr property survives. The leveraged-investor trade-off.
The Cost Segregation Trap No One Talks About: §1245 Recapture on Short Holds
Cost-seg accelerates deductions, but reclassified property is §1245 — accumulated depreciation comes back as ordinary income on sale. Here's the worked example most engineering firms don't share.
Cost Segregation for Medical and Dental Practice Owners: 21%+ in 5-Year Property
Medical and dental buildings reclassify materially higher than typical commercial — IRS ATG Ch. 7.5 supports a 21% 5-year personal property baseline. The worked $1.5M practice example, OBBBA 100% bonus, and the §1245 recapture if you sell.
When Cost Segregation Isn't Worth It: A Decision Framework for Rental Investors
Engineering firms market cost-seg aggressively. Four conditions where it actually loses money — small basis, short holds, §469 PAL trap, §163(j) ADS election. The honest decision framework.
How to Estimate Your Cost Segregation Savings in 30 Seconds (Free Calculator)
Free cost segregation calculator walkthrough — three numbers in, OBBBA-current 100% bonus rate, §469 PAL gating + §1245 recapture warnings. No email required.
Cost Segregation After a 1031 Exchange: Carryover Basis, Excess Basis, and the Election That Changes Everything
Cost-seg on a §1031 replacement property is constrained by carryover-basis rules — by default only excess basis is bonus-eligible. The simplified-method election, the worked $1.8M example, and the §1245 recapture interaction.
Form 3115 for Cost Segregation: DCN 7, §481(a) Catch-Up, and Rev. Proc. 2024-23 in Plain English
Look-back cost-seg studies are a §446 method change, not an amended return. The Form 3115 mechanics with DCN 7, the §481(a) catch-up math, and a worked 2022 example.
100% Bonus Depreciation Is Back: What OBBBA Means for Real Estate Investors in 2026
OBBBA §70301 made 100% bonus depreciation permanent for property acquired after Jan 19, 2025. What this means for your rental, STR, or commercial purchase — with worked examples.