Stop Overpaying Taxes on Your Rental Property
When you buy a rental property, the IRS makes you depreciate the entire building over 27.5 or 39 years. But a significant portion of the purchase price — cabinets, flooring, landscaping, appliances, lighting, specialty electrical, and plumbing — qualifies for 5-year or 15-year accelerated depreciation under IRS MACRS asset class rules.
A cost segregation study reclassifies these building components into their correct shorter-life asset categories, front-loading your depreciation deductions and increasing your cash flow in the early years of ownership. The problem? Traditional engineering-based cost segregation studies cost $5,000 to $15,000 and take 4 to 8 weeks to complete.
CostSegNow changes that. Same RCNLD (Replacement Cost New Less Depreciation) methodology and IRS-accepted framework, delivered instantly at a fraction of the cost. Our analysis engine is calibrated against real engineering cost segregation studies to ensure accuracy.
How CostSegNow Works
Step 1: Describe your property. Enter your property type, purchase price, year built, building grade, and key features like flooring, appliances, and whether the property has a pool or special landscaping. Takes about 60 seconds.
Step 2: We run the analysis. Our engine allocates your purchase price across IRS MACRS asset classes using construction cost benchmarks (RSMeans 2024 data) and MACRS classification rules. This follows the RCNLD methodology recognized by the IRS Cost Segregation Audit Technique Guide.
Step 3: Get your results. You receive estimated tax savings, a full component breakdown showing 5-year, 7-year, 15-year, and 27.5/39-year property allocations, a depreciation comparison, and bonus depreciation analysis reflecting current law including the One Big Beautiful Bill Act.
Property Types Supported
CostSegNow supports cost segregation analysis for single-family rentals, multifamily properties (2-4 units), apartment complexes (5+ units), office buildings, retail and strip malls, restaurants, industrial and warehouse properties, and hotels and motels. Each property type uses calibrated allocation profiles based on real engineering study data.
CostSegNow vs. Traditional Cost Segregation Studies
Traditional engineering cost segregation study: $5,000 to $15,000 cost, 4-8 week timeline, requires a site visit, requires hiring an engineering firm, often not cost-effective for properties under $1 million.
CostSegNow: $199 per report, 2-minute timeline, no site visit required, no engineering firm needed, works for properties of any size including those under $1 million.
Both approaches use the same underlying methodology: identifying building components that qualify for accelerated depreciation under IRS rules and reclassifying them from 27.5-year or 39-year property into 5-year, 7-year, or 15-year MACRS asset categories.
Bonus Depreciation Under Current Tax Law (Updated March 2026)
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, permanently restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. This is the most significant change to cost segregation benefits since the Tax Cuts and Jobs Act of 2017.
Current bonus depreciation rates: 2017 through 2022: 100% (under original TCJA). 2023: 80%. 2024: 60%. January 1 through January 19, 2025: 40%. After January 19, 2025: 100% permanently under OBBBA.
For property owners who purchased before 2025, a look-back cost segregation study combined with IRS Form 3115 (Change in Accounting Method) allows you to claim all missed accelerated depreciation as a single lump-sum Section 481(a) adjustment on your current tax return.
Who Uses CostSegNow
Rental property owners: Own a single-family rental, duplex, or small multifamily? Cost segregation is not just for large commercial buildings. Properties with a depreciable basis as low as $200,000 can benefit significantly.
Portfolio investors: Run cost segregation on every acquisition to maximize first-year deductions across your portfolio. Stack savings across multiple properties.
CPAs and tax advisors: Give your clients a fast, affordable cost segregation option. Use CostSegNow as a screening tool to identify which properties warrant a full engineering study.
Frequently Asked Questions About Cost Segregation
What is cost segregation?
Cost segregation is a tax strategy that reclassifies components of a building from long-life property (27.5 or 39 years) to shorter-life categories (5, 7, or 15 years). This accelerates your depreciation deductions, reducing your taxable income in the early years of ownership. Common reclassified components include flooring, cabinetry, appliances, lighting fixtures, landscaping, parking lots, and specialty plumbing and electrical systems.
How much does a cost segregation study cost?
Traditional engineering-based cost segregation studies typically cost $5,000 to $15,000 depending on property size and complexity, and take 4 to 8 weeks. DIY and software-based options range from $199 (CostSegNow) to $1,295 for commercial properties. CostSegNow is the most affordable option at $199 per analysis, using IRS-recognized RCNLD methodology calibrated against real engineering studies.
What properties qualify for cost segregation?
Any depreciable property used for business or investment purposes qualifies for cost segregation. This includes single-family rentals, duplexes, triplexes, fourplexes, apartment complexes, office buildings, retail spaces, strip malls, restaurants, hotels and motels, and industrial and warehouse properties. The property cannot be your primary residence. New construction and existing properties both qualify.
Can I do cost segregation on a property I already own?
Yes. You can file a catch-up deduction using IRS Form 3115 (Change in Accounting Method). This lets you claim all missed accelerated depreciation from prior years as a single lump-sum deduction on your current tax return. This is called a Section 481(a) adjustment. You do not need to amend prior-year returns.
What is the current bonus depreciation rate in 2025 and 2026?
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. This means 5-year, 7-year, and 15-year property identified in a cost segregation study can be fully deducted in the year the property is placed in service. For properties placed in service in 2024, the bonus rate was 60%. For 2023, it was 80%.
How accurate is CostSegNow?
CostSegNow estimates typically fall within 10 to 15 percent of a full engineering study for residential properties. Our engine is calibrated against multiple real engineering cost segregation studies and uses RSMeans 2024 construction cost data.
Will a CostSegNow report hold up in an IRS audit?
CostSegNow generates reports using IRS-recognized RCNLD methodology with detailed component breakdowns, MACRS classifications, and tax authority references. For properties under $1 million, many CPAs find our component breakdown sufficient for filing. For larger properties, our report is an excellent planning tool to determine if a full engineering study is warranted.
Real Example: $590,000 Rental Property in Encinitas, CA
Without cost segregation: Standard 27.5-year straight-line depreciation yields $20,545 per year in depreciation, resulting in approximately $7,602 in Year 1 tax savings.
With CostSegNow analysis: $214,701 in 5-year personal property identified (38% of depreciable basis). With 100% bonus depreciation, Year 1 deduction increases to $227,442, producing approximately $79,453 in additional Year 1 tax savings.