Cost Segregation: Studies, Strategies, and Depreciation Guides for Landlords

Cost segregation lets you accelerate depreciation on a rental property by reclassifying building components into shorter recovery periods: 5, 7, 15, and 27.5 years instead of depreciating the entire structure over 27.5 years. The tax savings in year one can be significant, but the decision is not as simple as "do the study and save money." Bonus depreciation is phasing down. Recapture hits when you sell. And smaller properties sometimes do not generate enough reclassifiable value to justify the study cost.

The real question is whether cost segregation fits your holding period, your exit strategy, and your overall tax position. A 1031 exchange defers recapture. A long hold amortizes the benefit. A quick flip makes the whole exercise pointless.

These posts break down cost segregation for rental investors who want to make an informed decision, not just chase a tax deduction. You will find the math behind study cost vs. benefit, the 2026 bonus depreciation schedule, how depreciation recapture works when you eventually sell, the difference between cost seg and straight-line depreciation, and whether a DIY approach makes sense for smaller properties.