Cost segregation reclassifies your property's components into 5-year and 15-year asset classes — unlocking 100% bonus depreciation and generating a Year 1 deduction that offsets W-2 income, business profits, and capital gains. Most STR owners have never done this.
When your property is rented at an average of 7 days or less per booking, the IRS classifies your rental activity differently than standard long-term rentals. Your losses become non-passive — meaning they directly offset your W-2 salary, business income, and capital gains on a dollar-for-dollar basis.
Without this classification, rental losses are passive and can only offset other passive income. Most STR owners on Airbnb or VRBO already meet this threshold without realizing the tax implications.
You likely qualify if:
A cost segregation study is an engineering-based tax analysis performed by qualified professionals. It identifies and reclassifies building components from their standard 27.5-year depreciation schedule into shorter-lived asset classes that qualify for accelerated and bonus depreciation.
Our team reviews your property records, cost documentation, and improvements. For existing properties, we conduct a thorough retroactive analysis using construction records, purchase agreements, and property inspection data.
We identify all personal property (5-year), land improvements (15-year), and FF&E components that qualify for accelerated depreciation — separating them from the structural building shell that remains on the 27.5-year schedule.
You receive a professionally prepared cost segregation report following ASCSP and IRS audit technique guidelines — including a complete depreciation schedule and PDF summary you can share directly with your CPA for implementation.
Enter your property details to estimate your Year 1 deduction and potential tax savings. Uses IRS-standard component allocation percentages and the correct bonus depreciation rate for your placed-in-service date.
Results are estimates. Actual study results vary based on construction type, property age, and improvements.
The One Big Beautiful Bill Act (OBBBA) permanently restored 100% bonus depreciation effective January 19, 2025. Both the acquisition date and placed-in-service date must fall on or after this date to qualify at 100%.
You'll receive a professional PDF report to share with your CPA
Short-term rental properties carry something most commercial properties don't: a full inventory of furnishings. Every item inside your rental that is tangible personal property — separate from the building structure itself — qualifies as 5-year IRS property class, fully eligible for 100% bonus depreciation.
A well-furnished Airbnb cabin may have $30,000–$80,000 in qualifying FF&E that has never been broken out from the property's standard depreciation schedule. This is one of the most commonly overlooked deductions in real estate.
Your cost segregation study includes a comprehensive FF&E assessment as part of the analysis — we identify, categorize, and value each qualifying item in accordance with IRS guidelines.
A furnished lakehouse purchased for $450,000 with $45,000 in qualifying furnishings, placed in service after January 19, 2025:
If you purchased your short-term rental property years ago and never performed a cost segregation study, those deductions have not expired — they are waiting for you through a retroactive look-back study filed via IRS Form 3115.
We perform a full cost segregation study as if it had been conducted at the time of your property's original purchase — reclassifying all qualifying components back to their first year of service.
All missed depreciation from prior years is captured in a single Section 481(a) adjustment applied to your current-year tax return. You do not need to amend prior returns.
Your CPA files Form 3115 (Application for Change in Accounting Method) with your current return. Under Revenue Procedure 2015-13, this is an automatic method change — no IRS advance approval required.
Multiple years of accumulated missed depreciation land in a single tax year — frequently eliminating your entire federal tax liability for that year, and in some cases generating a refund.
A property purchased in 2022 files a look-back study with the 2025 tax return, capturing all missed depreciation from 2022–2024 in one adjustment:
Estimates only. Actual results depend on property specifics, land value, FF&E, and applicable bonus depreciation rates by year. Form 3115 is filed by your CPA — we provide the complete documentation package.
The following examples are based on anonymized cost segregation study outcomes. Property type, construction, FF&E, and land values all affect results — your analysis will reflect your specific property.
A cost segregation study filed with the IRS must meet specific professional standards. Studies prepared incorrectly can be disallowed on audit. Here is what a properly prepared study looks like.
IRS audit technique guidelines require that cost segregation studies use an engineering approach — examining actual construction costs, property records, and physical inspections rather than applying blanket percentages.
Studies follow the American Society of Cost Segregation Professionals standards — the same framework used by Big Four accounting firms and accepted by IRS examiners during audit.
The final report includes a full depreciation schedule, component-by-component asset listing, and a summary PDF formatted for direct handoff to your CPA. Nothing is left for your accountant to interpret or recreate.
For look-back studies, we prepare the complete Form 3115 documentation — the 481(a) adjustment calculation, asset reclassification schedules, and CPA instruction letter — so your accountant can file with confidence.
Component-level analysis of all personal property, land improvements, and structural elements with IRS asset class designations
Complete depreciation schedule for every reclassified component — ready for tax software input or direct CPA use
Itemized identification and valuation of qualifying furniture, fixtures, and equipment in your rental property
A professional summary formatted to share with your CPA, financial advisor, or partners — explaining the study findings in plain language
Section 481(a) adjustment calculation and all supporting schedules your CPA needs to file the accounting method change
Your free analysis is a no-obligation property review. If you move forward, here is exactly what you receive.
A one-on-one call to review your property details, confirm eligibility, and walk through your estimated deduction — before you commit to anything.
A formatted cost segregation analysis you share directly with your CPA — professional enough to attach to a tax return or present to a financial partner.
Every component listed by asset class with its recovery period and annual depreciation — plug it directly into tax software or hand it to your accountant.
Comprehensive identification and valuation of qualifying furnishings, fixtures, and equipment inside your STR property.
For look-back studies, complete documentation package for your CPA including 481(a) calculations — no amended returns required.
We work directly alongside your existing CPA to ensure implementation is correct and all documentation is filed in accordance with IRS requirements.
The One Big Beautiful Bill Act permanently restored 100% bonus depreciation for property acquired and placed in service on or after January 19, 2025. The phase-down years that preceded it illustrate how quickly this can change. Every year you delay is a year you don't capture the full benefit.
Property must be acquired and placed in service on or after January 19, 2025 to qualify for 100% bonus depreciation under the OBBBA. Pre-OBBBA property uses the rate applicable to its original placed-in-service date.
Submit your information and we will review your property details and reach out within one business day to walk through your specific cost segregation opportunity — including an estimated deduction, any look-back eligibility, and a clear explanation of the process.
There is no obligation, no pressure, and no cost for the initial analysis. If the numbers make sense for your situation, we will provide a formal proposal. If they don't, we will tell you that too.
We'll review your property and be in touch within one business day.
We've received your information and will be in touch within one business day to walk through your property's cost segregation opportunity. Check your email for a confirmation. We look forward to speaking with you.