Frequently Asked Questions
Everything you need to know about cost segregation studies.
The Basics
What is a cost segregation study?
A cost segregation study is an engineering-based analysis that identifies components of your rental property that can be depreciated faster than the standard 27.5-year residential schedule. Items like flooring, cabinetry, appliances, landscaping, and certain plumbing and electrical components qualify for 5-, 7-, or 15-year recovery periods under MACRS — giving you significantly larger deductions in the early years of ownership.
Is this legal? Is it IRS-compliant?
Yes. Cost segregation is a well-established tax strategy explicitly recognized by the IRS. The IRS even publishes its own Cost Segregation Audit Techniques Guide outlining proper methodology. Every Segonomics report follows that guidance and MACRS classification rules, and includes audit-ready documentation.
What property types qualify?
We support residential rental properties up to 4 units: single-family homes, condos, townhouses, duplexes, triplexes, fourplexes, short-term rentals (Airbnb/VRBO), and mobile homes. The property must be used for rental or business purposes — not as a primary residence.
How much can I save?
It depends on your property value, property type, and tax bracket. Most residential rental owners see $20,000–$80,000 in additional first-year depreciation. Use our free savings calculator to get a personalized estimate based on your specific property.
The Process
How long does it take?
Intake takes about 5 minutes. Completed reports are delivered within 2 business days of submission and payment. No appointments, no scheduling, no site visits.
Do I need to schedule a site visit?
No. Our process is fully remote. We use the photos you submit, combined with public records and satellite data, to analyze the property. Clear photos of each room, flooring, countertops, cabinetry, fixtures, and landscaping are the most valuable thing you can provide.
What do I need to submit?
You'll need the property address, purchase price and closing date, and interior and exterior photos. If the property has a rental listing with photos (Airbnb, VRBO, Zillow), that link is also helpful. Any renovation details or recent improvements are worth noting too.
What do I get back?
A complete IRS-compliant cost segregation report with: asset classifications by 5-, 7-, 15-, and 27.5-year recovery period; cost basis allocations for each component; and the documentation your CPA needs to file Form 4562.
What do I do with the report once I have it?
Send it to your CPA or tax preparer. They'll use the reclassified asset schedules to update your depreciation on Form 4562.
Short-Term Rentals
Does cost segregation work with the short-term rental tax strategy?
Yes. For short-term rentals where the average guest stay is 7 days or less and the owner materially participates (typically 100+ hours per year), the IRS treats the activity as non-passive. Cost segregation combined with bonus depreciation can then generate first-year losses that offset W-2 or business income — not just passive rental income. Your CPA confirms whether you qualify; we provide the asset classification that makes the deduction possible.
What is material participation and do I need it?
Material participation means you are meaningfully involved in the operation of your rental. The most common test is 100+ hours of participation per year — handling guest communication, coordinating cleanings, managing listings, overseeing maintenance. If you self-manage your STR (even partially), you likely meet the threshold. This is what allows STR losses to offset your ordinary income. Long-term rental owners generally don't need material participation to benefit from cost segregation — the accelerated depreciation still reduces passive income and can offset gains from other rental properties.
What's happening with bonus depreciation in 2026?
Under current law, 100% bonus depreciation has been restored for qualifying property acquired after January 19, 2025. For property placed in service earlier, the bonus rate phases down (40% in 2025, 20% in 2026). Cost segregation is still valuable even at reduced bonus rates — the reclassified 5-, 7-, and 15-year assets depreciate faster than 27.5 years regardless of the bonus percentage. Your CPA can calculate the exact impact for your situation.
Audit & Risk
What if I get audited?
Audit protection is included with every study. If the IRS or a state taxing authority questions your cost segregation deductions, we provide supporting documentation and respond to reasonable inquiries at no additional charge.
What about depreciation recapture when I sell?
Depreciation recapture under Section 1250 applies when you sell, taxed at up to 25% on the accelerated portion. However, the upfront tax savings typically outweigh recapture when you factor in the time value of money — a dollar saved today is worth more than a dollar paid years from now. Many investors also defer both capital gains and recapture indefinitely through a 1031 exchange.
Pricing & Payment
How much does it cost?
A flat fee per property — no hidden costs, no retainer, no complexity-based pricing. Traditional cost seg firms charge $5,000–$10,000 for the same deliverable. See the pricing page for details, and enter your referral code at checkout for your exclusive rate.
I have a referral code. How do I use it?
Enter it in the referral code field when you fill out your study submission. The discount is applied automatically at the Stripe checkout step.