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 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.
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 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.
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.
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.
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.
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 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.
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.
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.
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.