Cost Segregation FAQ
Plain-English answers to the questions real-estate investors actually type into search engines and AI assistants — with primary-source citations from the IRC, IRS Pub 946, the Cost Segregation Audit Techniques Guide, and post-OBBBA Treasury guidance.
Cost segregation basics
Plain-English answers to cost segregation basics: what it is, when it's worth it, study costs, IRS audit risk, and the difference vs bonus depreciation.
Cost segregation for short-term rentals (Airbnb, VRBO)
How cost segregation works for Airbnb, VRBO, and other short-term rentals — the 7-day rule, material participation, and W-2 offset mechanics in 2026.
Bonus depreciation in 2026 (post-OBBBA)
Current bonus depreciation rates after OBBBA: 100% permanent for post-Jan 19 2025 acquisitions, 80% for 2023, 60% for 2024, plus the Jan 1-19 2025 carve-out.
Form 3115 and §481(a) catch-up
How Form 3115 and the §481(a) catch-up work for cost segregation on properties owned for years — DCN 7, automatic consent, and timing.
REPS, the 750-hour test, and §469 passive activity rules
REPS, the 750-hour test, material participation under §469, and how passive activity rules govern whether cost-seg losses offset W-2 income.
§1245 recapture and the cost-seg downside
How depreciation recapture works after cost segregation — §1245 vs §1250, the math on early sale, 1031 exchanges, and when cost-seg can lose money.