Cost Segregation Study
An engineering study that reclassifies building components for faster depreciation.
Instead of depreciating the entire building over 27.5 years, a cost segregation study identifies components with shorter lives: carpet (5 years), appliances (5-7 years), landscaping (15 years), electrical/plumbing improvements (15 years). By reclassifying these components, you accelerate depreciation deductions into earlier years. Combined with bonus depreciation, this can generate massive year-one deductions.
Cost seg studies cost $3K-$7K but can generate $30K-$100K+ in accelerated deductions on the right property. Generally worth it on properties over $200K. Talk to a CPA who specializes in real estate.
Depreciation
A tax deduction for the gradual wear of your rental property — 27.5 years for residential.
Bonus Depreciation
First-year additional depreciation on qualifying assets — phasing down annually.
Section 179 Deduction
Elect to expense qualifying assets immediately instead of depreciating over time.
Educational content only. Consult a CPA or attorney for advice specific to your situation.