Questions, asked plainly. Answers, the same way.

When you buy a rental property, the IRS lets you depreciate the building over 27.5 years (residential) or 39 years (commercial). A cost-seg study breaks the property apart into its components — carpet, appliances, landscaping, cabinetry, and so on — and reclassifies many of those components into shorter recovery periods (5, 7, or 15 years).

The result is a much larger deduction in the first year. Real money in your pocket, sooner. The methodology has been recognized by the IRS since the 1997 Hospital Corporation of America ruling, and for most STR owners it’s one of the highest-leverage tax moves available.

These are not alternatives. Cost segregation is the engineering study that identifies which property components qualify for accelerated depreciation. The study reclassifies components from 27.5/39-year recovery into 5/7/15-year buckets — which is what makes the accelerated MACRS schedules apply.

If you’ve heard them described as separate strategies, that’s a common confusion the industry has not bothered to clear up. Cost seg is the method. Accelerated depreciation is the result.

Three steps. First, the basis of the building is allocated between land (non-depreciable), building (27.5 or 39 years), and personal property + land improvements (5, 7, or 15 years). Second, every component is mapped to its MACRS class using the IRS Audit Techniques Guide rule book. Third, depreciation is calculated using the right convention (half-year, mid-quarter, or mid-month) and the bonus depreciation rate for your placed-in-service date.

The output is a report with year-by-year schedules a CPA can drop straight into a return. Form 3115 is included if the property has been on a prior return.

Across the market: DIY tools run $300–$800; AI-native providers like CostSegLogic charge $495 for a full Cost Segregation Report or $1,199 for CPA-Verified, with a standalone $99 recapture schedule for owners who already have a study and just need the recapture math (free at the $1,199 tier); engineered firms charge $3,000–$15,000 for the same methodology.

The work behind the study is mostly rule-based asset classification and depreciation math, so software delivers the same engineering result the firms do. The price gap is about overhead, not output. The /why-us ledger walks through the cost stack line by line.

Because the work behind a cost-seg study has been the same for decades, and most of it — asset classification, depreciation math, report formatting — is rule-based. Software does it in seconds, with the same rule book a $5,000 study uses.

The legacy price isn’t the work. It’s an inside-sales pipeline, a per-property site visit that the IRS doesn’t require, and consultant-driven delivery overhead. We don’t run any of that, so we don’t charge for it. See the full ledger.

Typically yes, if you hold the property 3+ years and use the STR loophole (avg stay ≤7 days, material participation) to offset W-2 income. Break-even on a $300K STR is usually under year 2.

Run the free snapshot for property-specific math — no card, instant first-year deduction estimate. If the number isn’t worth running on this property, the snapshot will tell you so.

Yes if you have real estate professional status (REPS) — the losses can offset non-passive income. Without REPS, K-1 losses from a long-term rental are passive and only offset passive income, which limits the value. The interview asks the right qualifying questions to flag this before you pay.

The STR loophole is the §469 carve-out: if average rental stays are 7 days or less and you materially participate, the activity is not “rental” for passive-activity purposes. That means losses — including the big first-year deduction from a cost-seg study — can offset W-2 income.

Cost segregation is the lever that makes those first-year losses large. The STR loophole is what lets them work against W-2.

No for STR (where the 7-day rule applies and material participation is enough). Yes for long-term rentals if you want the losses to offset non-passive income — without REPS, LTR losses are passive and only offset passive income.

Any one of: 100+ hours and more than anyone else; 500+ hours; or substantially all participation. These are the standard §469 material-participation tests applied to STR activity. Document them — calendar, message logs, receipts — in case the IRS ever asks.

Defensibility comes from sound methodology and clear documentation — not from price. Every CostSegLogic study is built on the same IRS-aligned rule book a $5,000 study uses, with the citations and asset classifications shown line by line. If the IRS asks questions, the documentation answers them.

The CPA-Verified tier adds a licensed CPA review and an audit-defense letter on file — the same belt-and- suspenders most STR owners want for higher-stakes properties. Most properties are well-served by the standard Cost Segregation Report; the higher tier is there when extra assurance is genuinely useful.

Yes. The IRS does not accept or reject studies based on whether software was involved — it evaluates the methodology and documentation. Studies that follow the IRS Cost Segregation Audit Techniques Guide and ship with line-by-line citations stand up the same way a manual study does.

Yes. We welcome you to put it in front of your own CPA or tax accountant. We’re confident they’ll give you the green light.

Every study uses IRS-aligned methodology, ships with the citations and asset classifications a CPA needs to review it, and includes a Form 3115 ready for signature. If you want a licensed CPA to sign off on your specific study and put an audit-defense letter on file, that’s the $1,199 CPA-Verified tier.

Cost segregation accelerates your deductions. You take more depreciation now, against today’s income. That’s genuinely valuable. But when you sell the property, a portion of those accelerated deductions get recaptured by the IRS — you owe a chunk of that back.

Almost no firm in this industry tells you that, because the pitch is easier to make if you don’t. We’d rather be the firm that sends every customer a plain-English recapture schedule alongside the study, so you know exactly what you’re accelerating, what’s owed back if you sell, and how to plan for it. No surprises, no spin.

§1250 (real-property) recapture is taxed at up to 25%. §1245 (personal-property) recapture is taxed at your ordinary marginal rate. The split between the two depends on what your study reclassified.

Hold 5+ years and most owners come out ahead even with full recapture — the time value of the early deductions beats the recapture bill. The recapture schedule shipped with each study shows the year-by-year tradeoff so you can run sell-vs-hold math before deciding.

A §1031 exchange defers §1250 (real-property) recapture into the replacement property. §1245 personal-property recapture is partially deferred but the rules are tighter. A 1031 doesn’t eliminate recapture — it pushes it forward. Run the math on both sides before assuming the exchange is the right move.

Typically 3+ years for STR, 5+ years for LTR with REPS. Below that horizon, recapture math can wipe out the time value of the early deductions. Run the free snapshot for a property-specific number — the answer depends on your marginal rate, hold period, and whether you’re using the STR loophole or REPS.

Every state treats this differently. Some states fully conform to federal bonus depreciation; some decouple entirely; some have addbacks that change the picture year-by-year. Your federal study alone doesn’t tell the whole story.

Every CostSegLogic study includes your state-specific situation in detail, with the schedules to match, so you know what your tax picture looks like where you actually live and file. We don’t ship half-answers.

CostSegLogic delivers the Cost Segregation Report within hours of finishing the interview. CPA-Verified turnaround is typically 3 business days for the licensed CPA review. Engineered firms typically take 4–8 weeks. DIY tools produce a same-day report but the review and reconciliation lengthen the real timeline.

Closing statement (HUD-1 or settlement statement), property tax assessor card, photos of the property and key components, basis allocation if you have one, and prior depreciation schedules if the property has been on a return. The interview walks you through what’s needed — most owners have everything within reach.

No. File Form 3115 (Change in Accounting Method) with the §481(a) catch-up adjustment in the current year. The full deduction from prior years lands as a single catch-up on the current return. We generate the Form 3115 in every Cost Segregation Report.

Form 3115 is the IRS Change in Accounting Method form. You file it any time you change how you depreciate a previously-placed-in-service property — for example, switching from straight-line to a cost-seg-classified schedule. CostSegLogic includes the Form 3115 (drafted, with all required election text) in every Cost Segregation Report. It’s signature-ready for your CPA.

DIY tools exist ($300–$800) and the IRS will accept a DIY study if it follows the Audit Techniques Guide. The tradeoffs: weaker documentation if audited, no Form 3115 generation in most tools, no state schedules, and you have to interpret the asset-classification rules yourself.

AI-native providers like CostSegLogic split the difference — engineer-grade output, software pricing. You get the rule book, the schedules, the Form 3115, and the state treatment without becoming a part-time depreciation analyst.

OBBBA (One Big Beautiful Bill Act) restored 100% bonus depreciation for property placed in service after the transition date. Cost segregation becomes more valuable because more of the reclassified short-life property qualifies for immediate write-off in year one. CostSegLogic’s engine applies the right bonus rate for each property’s placed-in-service date automatically.

For property placed in service after the OBBBA transition window, yes. Earlier placed-in-service dates fall under the prior phase-down schedule (80%/60%/40%/20%). The Cost Segregation Report applies the rate that matches your placed-in-service date — there’s no manual lookup required.

Yes. File Form 3115 with the §481(a) catch-up adjustment to claim the missed accelerated depreciation in the current year. We generate the Form 3115 with all required election text in every Cost Segregation Report. No amended returns required.

Only if you have material participation under the STR loophole (avg stay ≤7 days) or REPS status. Passive K-1 losses only offset passive income — that’s the §469 passive-activity rule, not something any provider can change. The interview asks the right qualifying questions before you pay.

Yes. Inheritance creates a stepped-up basis at fair market value, which gives you new depreciation runway. Cost seg on inherited property reclassifies that stepped-up basis into shorter MACRS classes. Worth running for most inherited rentals above $200K.

Built first for short-term rental owners running their own properties — the people most likely to benefit from cost seg and most likely to have been priced out of it. If that’s you, this is the right tool.

It’s also fine for long-term rentals, small commercial properties, and multifamily through 4 units. If you’re running a triple-net commercial deal or a fifty-unit multifamily, it still works — we ship Form 3115 and state-specific schedules on every study — but at that scale you may want the CPA-Verified tier.

Your data stays yours. We use it to run the study and to improve the model in aggregate. We don’t sell it, and we don’t share it. The full policy is on the privacy page.

Yes. The $1,199 CPA-Verified tier is buyable directly via the pricing page — Stripe checkout, no interview prerequisite. We recommend running the free snapshot first because it tells you whether the deduction justifies the upgrade, but if you’ve already decided, you can buy CPA-Verified directly and we’ll route the interview through the same flow afterwards.

Specific revenue-share economics — base rate, volume thresholds, payout cadence — live in the partner agreement. We’d rather walk you through the real math one-to-one than advertise headline rates we’d have to footnote down later. The headline value of partnering isn’t the check from us; it’s that you become the advisor who can answer “is cost seg worth it for me?” in five minutes instead of three weeks. See /partners for the four-track program.

On the /sample-report page. Direct PDF download, no card or email gate. The sample is a free-snapshot output for an illustrative short-term rental, with a side-by-side mini comparison of what’s in the free tier vs. the $495 Cost Segregation Report and a representative state-schedule snippet so you can see what the state-specific treatment looks like before you run your own. Direct PDF →